Preamble

The House met at a Quarter before Three of the Clock, Mr. SPEAKER in the Chair.

PRIVATE BUSINESS.

Fylde Water Board Bill,

As amended, considered; to be read the Third time.

Glasgow Corporation Order Confirmation Bill,

Read the Third time, and passed.

Metropolitan Common Scheme (Palewell) Provisional Order Bill,

Read a Second time, and committed.

SHEFFIELD CORPORATION (TRAMWAYS) PROVISIONAL ORDER BILL,

"to confirm a Provisional Order made by the Minister of Transport under the Tramways Act, 1870, relating to Sheffield Corporation Tramways," presented by Captain Austin Hudson; read the First time; and referred to the Examiners of Petitions for Private Bills, and to be printed. [Bill 58.]

Oral Answers to Questions — GERMANY (ARMAMENTS).

Mr. COCKS: 1.
asked the Secretary of State for Foreign Affairs whether he is now in a position to make a further statement regarding the present strength of the German air force?

The SECRETARY of STATE for FOREIGN AFFAIRS (Sir John Simon): I cannot add anything to-day to the answer which I gave to my hon. Friend the Member for Chester (Sir C. Cayzer) on 3rd April.

Mr. COCKS: Has the attention of the right hon. Gentleman been called to the statement that the Germans now have a superiority in the air, and can he confirm that?

Sir J. SIMON: That question, I think, could be referred to in the Debate to-morrow.

Mr. COCKS: 5.
asked the First Lord of the Admiralty whether he is yet in a position to give the House any information regarding the re-opening of the German submarine training college at Kiel which was closed in 1918?

The FIRST LORD of the ADMIRALTY (Sir Bolton Eyres Monsell): No, Sir. We have no information on the subject.

Mr. COCKS:: Will the right hon. Gentleman confirm the statement that it was opened on 1st October, 1933, that is to say before Germany left the Disarmament Conference?

Sir B. EYRES MONSELL: Yes, Sir, our information is that this establishment which is called a submarine defence college, was opened at that time.

Mr. PIKE: Is the right hon. Gentleman aware that the students of Ruskin College are taught by chart rather than upon a basis of facts?

Mr. COCKS: 8.
asked the First Lord of the Admiralty whether he can give the House any further information regarding the construction of submarines by the German Government?

Sir B. EYRES MONSELL: The British naval attaché at Berlin was informed on the 26th April by the German authorities that the order to manufacture machinery, armament, etc., for 12 250-ton submarines was given at Christmas; and the order to construct the hulls and assemble the component parts was given about the middle of April. He was also informed that as the result of extensive preparations which had been made, the first submarines would probably be completed within six months.

Mr. COCKS: Has the attention of the right hon. Gentleman been called to the statement that the Germans were building submarines more than a year ago and that some of those submarines are over 1,000 tons displacement, and has he any information to confirm that statement?

Sir B. EYRES MONSELL: No, Sir. We have heard many statements, but we have no information on the subject.

Captain PETER MACDONALD: Can the right hon. Gentleman say what is the effective range of these 250-ton submarines—approximately?

Sir B. EYRES MONSELL: I think it would be very premature to say. I have no information about their construction whatsoever.

Mr. THORNE: Does not the right hon. Gentleman think the time has arrived to abolish the construction of submarines, and is he not aware that but for the opposition of France this might have been agreed to?

Mr. KIRKWOOD: Arising from the original answer, is it not the case that if the Government here were in earnest they could not build submarines in Germany, because we hold control of 90 per cent. of the nickel of the world, and the Germans have neither copper nor tin in their country and have to import it?

Mr. MORGAN JONES: 46.
asked the Prime Minister whether his article on Peace, Germany and Stresa, in a weekly journal, on the responsibility accruing to the German Government for the failure of peace negotiations, represents the policy of His Majesty's Government?

The PRIME MINISTER (Mr. Ramsay MacDonald): The Government views on the effect of Germany's recent actions as regards military claims, both as to methods and amounts, have been expressed at Stresa and Geneva and indicated in this House in speeches both by my right hon. Friend the Foreign Secretary and myself. The article referred to in the question is substantially on the lines of these statements, and does represent the views of His Majesty's Government.

Mr. THORNE: Does not the right hon. Gentleman think he has put the cat among the pigeons once again?

Mr. JONES: Does not the Prime Minister consider that it was against the public interest to publish the article that he did in the periodical to which I have referred?

The PRIME MINISTER: I consider that it was in the public interest.

Mr. MANDER: Is not this one of the best articles that the Prime Minister has written for a long time?

Mr. COCKS: Is the Prime Minister aware that this is the first thing that he has done since 1931 which has met with a certain amount of approval from some of my colleagues?

Oral Answers to Questions — ITALY AND ABYSSINIA.

Mr. MANDER: 2.
asked the Secretary of State for Foreign Affairs whether the situation between Italy and Abyssinia, and the appeal of the latter to the Council of the League of Nations, were considered by representatives of the British and Italian Governments at Stresa; and whether any opportunity was afforded to the Abyssinian Government to take part in the discussions or put its point of view?

Sir J. SIMON: No, Sir, the Italo-Ethiopian dispute was never on the agenda of the Stresa Conference and the subject was not discussed there. The second part of the question therefore does not arise. I ought to add that informal conversations took place at Stresa between British and Italian officials on matters connected with the watering and grazing rights of nomadic British Somali tribes in certain zones outside the boundary of British Somaliland. But that, of course, does not touch the merits of the Italo-Abyssinian dispute.

Mr. MANDER: Do I understand that there were no informal conversations at Stresa about the Abyssinian dispute?

Sir J. SIMON: I think my answer is quite clear.

Mr. MANDER: 4.
asked the Secretary of State for Foreign Affairs the present position with regard to arbitration between Italy and Abyssinia under the terms of the 1928 treaty; and whether this is to include, in addition to the Walwal and subsequent incidents, the question of the interpretation of the frontier treaty of 1908?

Sir J. SIMON: As regard, the first part of the question, I would refer the hon. Member to the reply given yesterday to the hon. Member for Wentworth (Mr. Paling). As regards the second part, no agreement has, so far as I am aware, yet been reached between the two parties on the terms of reference of the proposed Conciliation Commission. As I understand it, both the formation of the Conciliation Commission, and its terms of
reference are matters for direct negotiation between the two parties who are in touch on these matters.

Mr. MANDER: Is it not very important that the whole of the questions in dispute should be included, and will His Majesty's Government do everything possible to persuade both parties to accept that position?

Sir J. SIMON: We have done everything possible and shall continue to do so to help both of these parties, who are in good relations with ourselves, but, as I have said, the terms of reference are really a matter for negotiation between the two parties, and I very much hope they will come to terms about them

Oral Answers to Questions — ASSYRIAN REFUGEES.

Mr. MANDER: 3.
asked the Secretary of State for Foreign Affairs whether he has any statement to make with reference to the decision of the Council of the League of Nations concerning the settlement of Assyrian refugees in Syria and the reasons why British Guiana proved unsuitable?

Sir J. SIMON: The project of settling Assyrian refugees in Syria is about to be further explored locally by the President of the Committee of the League of Nations Council which is dealing with the matter, in consultation with the French authorities and the Iraqi Government. As regards British Guiana, the President of the Council Committee has addressed to His Majesty's Government a letter in which he explains that the report of the League of Nations Mission of Investigation sent to that Colony has revealed the existence of serious difficulties. These rendered it impossible to form a reliable opinion regarding the number of persons who could be settled satisfactorily in the area contemplated, and in the judgment of the mission would make it necessary, seeing that the Assyrians are accustomed to very different conditions of life, to proceed in the first place by way of an experiment of very limited scope over an uncertain number of years. The President added that the Committee has therefore been reluctantly forced to the conclusion that settlement in British Guiana cannot be regarded as offering a solution of the
large and urgent problem which it has been asked to assist in solving.

Mr. MANDER: Will the report be published in due course?

Sir J. SIMON: I will make inquiries and inform my hon. Friend with pleasure. I really do not know the answer to that question.

Oral Answers to Questions — ROYAL NAVY.

PETTY OFFICERS (AIR PILOTS).

Commander MARSDEN: 6.
asked the First Lord of the Admiralty whether the Admiralty intend to alter the existing arrangements with the Air Council for the purpose of enabling Naval petty officers to qualify as pilots in the Fleet air-arm under the same conditions as sergeant-pilots of the Royal Air Force now employed in the Fleet air-arm?

Sir B. EYRES MONSELL: The existing arrangements are the result of a Government decision made in 1928, and could not be altered by departmental action.

LONDON NAVAL TREATY (CRUISERS).

Commander MARSDEN: 7.
asked the First Lord of the Admiralty whether the Admiralty intend to make use of the escalator clause of the London Naval Treaty for the purpose of retaining for service in His Majesty's Fleet the cruisers "Hawkins," "Effingham," "Frobisher," and "Vindictive"?

Sir B. EYRES MONSELL: It would be premature to make any statement on this subject pending the holding of the Naval Conference, which we hope will take place this year.

Commander MARSDEN: Is the right hon. Gentleman aware that there are many people in this country who are very much concerned about the fate of these four ships, which have many years of useful service before them, and cannot he regard the matter quite independently of the opinions and feelings of other countries?

Sir B. EYRES MONSELL: I hope that my hon. and gallant Friend will not press me on this subject. We are in the middle of very delicate negotiations. He can be quite sure that the Admiralty have all these things in mind.

Oral Answers to Questions — TRADE AND COMMERCE.

PALESTINE FRUIT.

Mr. RANKIN: 9.
asked the Secretary of State for the Colonies whether, in view of the increasing export of Palestine oranges to Great Britain, he will arrange for a conference between growers in Palestine and British shipping interests before the next export season to review the possibility of sending this large volume of fruit to Great Britain in British instead of in foreign holds?

The SECRETARY of STATE for the COLONIES (Sir Philip Cunliffe-Lister): I understand that discussions have already taken place between British shipping interests and Palestine exporters.

Captain STRICKLAND: Can the right hon. Gentleman inform us whether there is any British line which at the present time runs a regular service to Haifa?

Mr. GEOFFREY PETO: Will the right hon. Gentleman endeavour to secure a regular service to Cyprus as well as to Haifa, and will he bear in mind that oranges from Cyprus, our own Colony, are larger, sweeter and juicier than those from Palestine?

Sir ROBERT HAMILTON: May I ask whether the arrangements which are in prospect for carrying Palestinian oranges will provide for ships calling at Cyprus?

Sir P. CUNLIFFE-LISTER: I could not answer that question, because the discussions have only recently been proceeding between the British shipping interests and interests in Palestine, with the British commercial agent assisting; but I have many times expressed the hope that British lines will be able to call at Cyprus as well as at Haifa.

Captain STRICKLAND: Will the right hon. Gentleman answer my question whether there is any British line at the present time with a regular service to Haifa?

Sir P. CUNLIFFE-LISTER: I should like notice of that question.

FOREIGN-MILLED FLOUR (IMPORTATION).

Brigadier-General NATION: 34.
asked the President of the Board of Trade whether, in view of the fact that the Import Duties Advisory Committee have
been unable to make any recommendation in regard to the two applications that have been made to them for an increased duty to be placed upon foreign-milled flour, and also that the importations of this class of flour into the United Kingdom during 1934 exceeded those of 1933 by 28 per cent. and were 15 times greater than similar imports in 1928, he will take any steps to prevent such flour from being imported at prices below those ruling in the country of manufacture?

Lieut.-Colonel J. COLVILLE (Secretary, Overseas Trade Department): My right hon. Friend is fully aware of the facts relating to the importation of foreign flour, but, according to his information, imports in 1934 were some 13 per cent., not 15 times, greater than in 1928. If the industry think there are new facts that require to be taken into consideration in this connection, those facts can be brought to the notice of the Import Duties Advisory Committee.

Mr. HERBERT WILLIAMS: Is my hon. and gallant Friend aware that under the system of subsidy adopted in France for shipping flour to this country, French flour can be offered for sale here at prices far below those prevailing in France?

Lieut.-Colonel COLVILLE: I understand that those facts will be laid before the Import Duties Advisory Committee if the industry decides to take the matter further.

SOYA BEANS.

Mr. THORNE: 35.
asked the President of the Board of Trade whether he will give a list of all the countries from which soya beans are imported and what is the price per ton?

Lieut.-Colonel COLVILLE: Imports of soya beans into this country are con-signed mainly from the Kwantung Peninsula. During recent years, smaller imports have also been consigned from the Soviet Union, China, Japan and the United States of America. The average declared value of the imports during the year 1934 was about £5 14s. per ton.

Brigadier-General NATION: Can the soya bean be produced in any of our Colonies at the present time, and, if so, in what quantity?

Lieut.-Colonel COLVILLE: I think the matter can hardly be discussed at Question Time. There will be an opportunity later to-day for hon. Members to express any views on the subject.

Mr. THORNE: 37.
asked the President of the Board of Trade whether he has considered the protests from the Hull seed crushers and the British oil and cake manufacturers in connection with the duty on soya beans; and whether he can state for what purpose the soya bean is used?

Lieut.-Colonel COLVILLE: Representations have been received on the subject and there will be an opportunity of discussing the matter to-day. Soya beans are used mainly as a source of oil for margarine and soap manufacture, and of cake and meal for the feeding of cattle.

EXPORTS (COLONIES).

Captain P. MACDONALD: 36.
asked the President of the Board of Trade how the exports of British manufactures to the Colonies in 1934 compare with those for each of the four preceding years?

The following table shows the total declared value of the produce and manufactures of the United Kingdom exported to all British countries, other than the Dominions and British India, during the undermentioned years, distinguished (1) all commodities and (2) articles classified in the trade returns as wholly or mainly manufactured.


—
1930.
1931.
1932.
1933.
1934.


Produce and manufactures of the United Kingdom:
£'000
£'000
£'000
£'000
£'000


(1)Exports of all commodities
…
52,448
37,722
38,887
37,282
39,299


(2) Exports of articles wholly or mainly manufactured (a)
38,405
27,024
28,137
26,296
(b)


(a) Excluding manufactured foodstuffs and tobacco.


(b) Not yet available.

Oral Answers to Questions — TRANSPORT.

PEDAL CYCLISTS.

Major BEAUMONT THOMAS: 13.
asked the Minister of Transport whether he has discussed with representatives of the Cyclists Touring Club and the National Cyclists Union the measures he has taken, or those which he has in mind, for ensuring greater safety on the roads to all road users?

The MINISTER of TRANSPORT (Mr. Hore-Belisha): I consulted with these bodies before making the Regulations

Lieut.-Colonel COLVILLE: I am sending my hon. and gallant Friend particulars of exports of all United Kingdom goods to the British Empire, excluding the Dominions and India, during the years 1930 to 1934, and of the exports to those destinations of articles classed as wholly or mainly manufactured during the years 1930 to 1933. The corresponding information regarding exports of United Kingdom manufactures during the year 1934 is not yet available.

Mr. PETHERICK: Does the statement contain information in terms of volume as well as of value?

Lieut.-Colonel COLVILLE: The information I have supplied is in terms of value.

Captain MACDONALD: Can we have the figures now?

Lieut.-Colonel COLVILLE: They would take some time to read. [HON. MEMBERS: "Circulate them."] If hon. Members wish it, I will circulate them.

Following are the particulars:

with respect to the exhibition of white surfaces on cycles. With regard to the experimental tracks for cyclists, I have been made aware of their views on this subject.

Major THOMAS: 14.
asked the Minister of Transport whether he will consider increasing on the Transport Advisory Council the representation of recognised cyclists' associations?

Mr. HORE-BELISHA: The constitution of the council provides for one representative of pedal cyclists.

Mr. WEST: Seeing that cyclists are so very numerous in this country, does not the hon. Gentleman think they ought to have more representation on the committee?

Mr. HORE-BELISHA: Parliament determined the balance of representation on the committee, and I think the views of cyclists can be well expressed by the present representative.

MOTOR DRIVERS (TEST).

Mr. PARKINSON: 15.
asked the Minister of Transport the number of persons, male and female, that have been examined for the new driving test; and the number that have failed to satisfy the examiners?

Mr. HORE-BELISHA: Up to and including the 27th April, 22,539 persons have been examined, of whom 1,863 have failed to satisfy the examiners. The periodical returns furnished by the examiners do not distinguish between male and female applicants.

Mr. WEST: Do not those figures convince the Minister that there must be an enormous proportion of motorists to-day who are unfit to drive?

Mr. HORE-BELISHA: It is the purpose of the test to prevent, at any rate to some degree, bad drivers from getting on to the roads.

Mr. TINKER: Have those who fail another opportunity to undergo a test?

Mr. HORE-BELISHA: Yes, they can certainly submit themselves for a test again after the lapse of the statutory period.

ACCIDENTS.

Mr. PARKINSON: 16.
asked the Minister of Transport the number of accidents that have arisen by vehicles passing on the off-side of stationary tramcars during the last six months; and whether it is proposed to make it compulsory that all on-coming vehicles should pass on the near-side?

Mr. HORE-BELISHA: The weekly returns of accidents are not sufficiently detailed to enable me to give this information for the period in question. I am advised that I have no power to make a general regulation in the sense suggested.

BUILT-UP AREAS (SPEED LIMIT).

Captain Sir WILLIAM BRASS: 22.
asked the Minister of Transport whether he has given further consideration to the question of a more satisfactory indication of the end of the 30-miles-per-hour speed limit in built-up areas; and if so, what action he proposes to take?

Mr. HORE-BELISHA: Yes, Sir. The diameter of the de-restriction signs indicating the ends of the speed limit will be increased from 8 inches to 18 inches, that is, the same as the "30" sign. In addition, I have given instructions to the local authorities in London and the Home Counties to erect a sign on each side of the road wherever the speed limit begins or ends showing the "30" sign to motorists entering the speed limit and the "de-restriction" sign to motorists leaving the speed limit. I am issuing similar instructions to all local authorities throughout the country.

Sir W. BRASS: While thanking my hon. Friend very much for his answer, may I ask whether he will make sure that local authorities do what he says, and whether he will remember that he has power under the Act to do things himself if the local authorities do not?

Mr. HORE-BELISHA: I will do my level best, as I think I have shown by my answer to the question, to assist motorists in every possible way.

Lieut.-Commander AGNEW: Will the cost of affixing the new sign be reimbursed to the local authorities, who will otherwise have to bear the cost?

Mr. HORE-BELISHA: There will be no appreciable increase in cost, because the signs will only be put at the limits of the areas, and the smaller signs can still be used on lamp posts elsewhere.

Mr. MABANE: Will the Minister take steps to secure that the 30-miles-an-hour sign and the de-restriction sign are always at the same place on the road, because at some places they are at different points, perhaps 200 yards apart?

Mr. HORE-BELISHA: Yes, Sir, I will try.

Mr. PIKE: Will the Minister take steps to ensure that the signs are within perfect vision of the driver, and not, as in
many instances, round corners, in which case drivers pass them before they have seen them?

Mr. HORE-BELISHA: It is most desirable that they should be.

Mr. TINKER: 48.
asked the Secretary of State for the Home Department the number of persons, male and female, that have been summoned for exceeding the 30-mile limit in built-up areas since the 18th March; the number that have been convicted; and the total amount of fines?

The SECRETARY of STATE for the HOME DEPARTMENT (Sir John Gilmour): I regret that I do not feel justified in asking the police to undertake the work that would be involved in compiling a return of this kind. I will consider later whether it would be possible to obtain figures of a more limited kind after the general speed limit in built-up areas has been in operation for a longer period.

Mr. PIKE: Can the right hon. Gentleman say how many of the persons convicted have had their fines returned?

Mr. SIMMONDS: 23.
asked the Minister of Transport what action he is taking to accelerate the decontrol of those thoroughfares in built-up areas which do not need the application of the 30 miles per hour limit?

Mr. HALL-CAINE: 18.
asked the Minister of Transport to which highway authorities he has addressed communications suggesting that areas of road under their control have been unnecessarily subjected to the 30 miles per hour speed limit; and in which of such cases de-restriction has now taken place?

Mr. HORE-BELISHA: I will circulate in the OFFICIAL REPORT a list of the authorities to whom I have addressed communications in this sense. Five of these authorities have already agreed to de-restrict certain roads in response to the suggestions I have made to them. In a number of other cases I have intimated that my consent to orders imposing restrictions was subject to early review. My hon. Friend will have observed that I gave notice yesterday in the London Gazette of my intention to deal with a number of roads in the London traffic area.

Mr. SIMMONDS: Will my hon. Friend make it clear to these local authorities that it is a matter of urgency, because in many of these thoroughfares where the 30 miles limit is obviously absurd, traffic each week is speeding up, and, if we are not careful, we shall be back where we were under the 20 miles an hour limit?

Mr. HORE-BELISHA: I am so very well aware of the urgency that in some appropriate cases where the local authority has not accepted my suggestion, I have given instructions for a local inquiry to be held. That is the only step that I can take.

Sir W. BRASS: Am I to understand that the consent was provisional on some of these roads?

Mr. HORE-BELISHA: Yes, Sir. In cases where I did not agree with the local authorities I said that they could have regard to the wishes of their local inhabitants in spite of my views, but that I would hold myself open to review the matter at an early date.

Mr. LUNN: Is it not a fact that since the establishment of the 30 miles speed limit motorists are giving far more consideration to the pedestrians than they have ever done before, and that at the present time the pedestrians are feeling far more confidence in motorists than they have had in recent years?

Mr. HORE-BELISHA: I am very glad to have that expression of opinion, which I think is generally held.

Following is the list:

Bucks C.C.
Durham C. C.
Yorks (West Riding) C.C.
Lanarkshire C.C.
Birmingham C.B.C.
Blackburn C.B.C.
Blackpool C.B.C.
Bristol C.B.C.
Derby C.B.C.
Liverpool C.B.C.
Manchester C.B.C.
Newcastle-on-Tyne C.B.C.
Plymouth C.B.C.
Reading C.B.C.
Cardiff C.B.C.
Swansea C.B.C.
Dundee C.B.C.
Bedford B.C.
Swinton and Pendlebury B.C.
359
Wallsend-on-Tyne B.C.
Worthing B.C.
Oldbury U.D.C.
Huddersfield C.B.C.
Middlesbrough C.B.C.
Maidenhead B.C.
Chatham B.C.
Solihull U.D.C.

ROAD SERVICE LICENCES.

Mr. McKEAG: 25.
asked the Minister of Transport when he proposes to introduce the necessary regulations under the Road Traffic Act to extend the period of validity of road service licences in respect of stage carriage services from one year to three years?

Mr. HORE-BELISHA: The Traffic Commissioners are of opinion that conditions are not yet sufficiently stable to warrant the extension of the period of validity of road service licences in respect of stage carriage services from one year to three.

Mr. McKEAG: May I ask if the Minister will appreciate that the necessity for making annual applications for renewal of their road service licences casts a real burden upon particularly the smaller type of omnibus operator, and will he therefore expedite the extension of the period of validity?

Mr. HORE-BELISHA: When stability has been reached, the question can be more appropriately considered.

LONDON PASSENGER TRANSPORT BOARD.

Captain STRICKLAND: 26.
asked the Minister of Transport whether his attention has been drawn to the decision of Judge Beazley at Ilford County Court, on Monday, 15th April last, to the effect that the London Passenger Transport Board was entitled to the protection of the Public Authorities Act, because it was stated to be a public authority in the London Passenger Transport Act and was not trading for profit but carrying on its business for the public benefit; and whether he is satisfied that the present and future practice of the board will entail their obtaining from outside sources essential supplies of accessories which have hitherto been furnished satisfactorily by independent companies?

Mr. HORE-BELISHA: My attention has been drawn to the judgment to which my hon. and gallant Friend refers. The board are free, subject to compliance
with Sections 6 and 21 of the London Passenger Transport Act, 1933, to purchase their supplies as they think proper in the interests of the board.

Captain STRICKLAND: Are we to understand that, according to that decision, the London Passenger Transport Board will now be able to set up auxiliary plant for the manufacture of things other than those actually connected with the transport of passengers?

Mr. HORE-BELISHA: I would not like to attempt to interpret an Act of Parliament in an answer to a supplementary question, but, if my hon. and gallant Friend will write me upon the subject saying exactly what he has in mind, I will give him a considered answer.

ROAD DIRECTION SIGNS.

Mr. H. WILLIAMS: 21.
asked the Minister of Transport what steps have been taken to improve road direction signs throughout the country and, in particular, to provide for their visibility at night?

Mr. BORE-BELISHA: In 1933 highway authorities were informed that the Minister accepted the Report of the Departmental Committee on Traffic Signs which included recommendations for the improvement and standardisation of traffic signs and for the illumination, either positively or by means of reflectors of certain signs of a mandatory and warning character. Highway authorities were reminded in this matter in February last.

Mr. WILLIAMS: Will my hon. Friend tell me what happens about direction signs which tell you how to get to places, and not the signs warning you not to do certain things?

Oral Answers to Questions — HIS MAJESTY'S SILVER JUBILEE.

Mr. D. G. SOMERVILLE: 24.
asked the Minister of Transport what special arrangement are to be made by the London Passenger Transport Board for leave and payment of their staff in connection with the Jubilee, in order to conform with the arrangements which are being made in this connection by the four main-line railways companies?

Mr. HORE-BELISHA: I understand that the board have decided that, so far as practicable, their regular staff shall be
given a day's leave with pay upon 6th May. Payment will be at the ordinary time or day rates, and in so far as staff cannot be liberated because of public requirements, they will be allowed to have another day in lieu thereof with pay, or, alternatively, paid in respect of 6th May for work done at ordinary time or day rates, and receive, in addition, a sum equivalent to another day's pay at ordinary time or day rates.

Mr. MARTIN: 32.
asked the Secretary for Mines whether any other coalfield has followed the example of South Wales by establishing a Jubilee fund for retirement pensions?

Lieut.-Colonel COLVILLE: I have been asked to reply. My hon. Friend has not heard of any such proposals in any coalfield other than South Wales.

Mr. H. WILLIAMS: 43.
asked the Home Secretary whether, having regard to the fact that the Commissioner of Police has prohibited vehicular traffic in Parliament Square between 9 p.m. and midnight during Jubilee week, he will state what arrangements will be made for the cars of Members to enter and leave New Palace Yard during that period?

Sir J. GILMOUR: As the House is aware, a number of public buildings in the neighbourhood of the Houses of Parliament are to be flood-lighted on each night of the week beginning 6th May, from about 9.15 p.m. to midnight, and it is anticipated that large crowds will assemble to see the illuminations. In order to enable free movement of the crowds without risk of accident, it has been necessary for the Commissioner of Police, in pursuance of his powers and duties under Section 52 of the Metropolitan Police Act, 1839, to impose considerable restrictions on the use of the streets in the area concerned by vehicular traffic. Full particulars of the police arrangements have been advertised in the Press, and I am arranging for maps showing the routes available for Members to be exhibited from to-day in suitable places in the House. The Commissioner is fully alive to the necessity of carrying out the directions in the Sessional Order as to obviating obstruction to the passage of Members to and from the House. The arrangements which have been made for the nights of the 7th, 8th and 9th May will ensure that access
by car will be possible from Victoria via Victoria Street, Great Smith Street, Wood Street and Abingdon Street, or from Chelsea and Vauxhall via Millbank, And the police will do their best to see that access to and egress from New Palace Yard is not interrupted. Hon. Members will appreciate, however, that the streets mentioned are likely to be a good deal congested, and, although the police will do everything possible to assist Members, there may be a certain amount of delay. It will greatly facilitate the police in the performance of their difficult duties if as many Members as possible desiring to reach the House on the evenings of Tuesday, Wednesday and Thursday next will proceed by foot or by the Underground Railways, and I feel certain that I can rely on the co-operation of hon. Members in this manner.

Oral Answers to Questions — ARMY RESERVISTS (UNEMPLOYMENT AND PUBLIC ASSISTANCE).

Mr. DENVILLE: 28.
asked the Minister of Health whether he has any further information to give the House regarding the deductions from Reservists' pay when assessing their needs under public assistance?

The PARLIAMENTARY SECRETARY to the MINISTRY of HEALTH (Mr. Shakespeare): My right hon. Friend has had enquiries made into the practice in the two places of which my hon. Friend has informed him, and has just received the information, with which I will furnish him. My right hon. Friend has not received other complaints.

Mr. DENVILLE: I beg to give notice that, as we can get no satisfaction, I intend to raise this matter on the Motion for the Adjournment.

Mr. DENVILLE: 53.
asked the Minister of Labour whether he has any further information to give the House regarding the deductions from Reservists' pay when assessing their needs under the Unemployment Assistance Board?

The PARLIAMENTARY SECRETARY to the MINISTRY of LABOUR (Mr. R. S. Hudson): I cannot add to the reply given by my right hon. Friend on 11th April to the hon. Member for Spenny-moor (Mr. Batey) on this subject.

Mr. DENVILLE: Arising out of the answer, I beg to give notice that I intend to raise this matter on the Adjournment to-night.

Oral Answers to Questions — NATIONAL HEALTH INSURANCE.

Mr. GORDON MACDONALD: 29.
asked the Minister of Health the total amount of the National Health Insurance funds at 31st December, 1934?

Mr. SHAKESPEARE: The amount was approximately £129,500,000.

Mr. MACDONALD: Does the Minister not consider it advisable that some of this amount should be used to safeguard the interests of those who are suffering from the effects of prolonged unemployment?

Mr. SHAKESPEARE: The whole question of unemployment in relation to health insurance is being considered now.

Mr. T. SMITH: Can the Minister say when the promised amending Bill will be introduced?

Mr. SHAKESPEARE: As soon as possible.

Mr. THORNE: In the present Parliament?

Oral Answers to Questions — CONTRIBUTORY PENSIONS ACT.

Mr. G. MACDONALD: 30.
asked the Minister of Health the total amount of the funds under the Widows', Orphans', and Old Age Contributory Pensions Acts in hand at 31st March, 1935?

Mr. SHAKESPEARE: The amount was approximately £22,500,000.

Mr. PIKE: Does my hon. Friend consider that that amount of money justifies a Money Bill to allow small supplementations during Jubilee Week?

Oral Answers to Questions — WATER SUPPLIES.

Mr. McKEAG: 31.
asked the Minister of Health whether he can give any information as to the present position in regard to the water supply for Sherburn Hill, in the county of Durham?

Mr. SHAKESPEARE: Sherburn Hill has recently been included within the limits of the Durham County Water Board, and is now being supplied by the board.

Oral Answers to Questions — AGRICULTURE.

POTATOES.

Captain SHAW: 38.
asked the Minister of Agriculture whether he is aware that there are still large quantities of ware potatoes unsold and available for consumption in this country; and whether he will take steps to ensure that the importation of new Spanish potatoes is further restricted?

The MINISTER of AGRICULTURE (Mr. Elliot): It is, of course, usual for supplies of ware potatoes to be still on hand at this time of the year, and I can assure my hon. and gallant Friend that all relevant circumstances, including the home supply position, were taken into consideration in determining the arrangements for the regulation of imports of foreign early potatoes during the present season. I am aware of no sufficient reason for altering those arrangements at this stage.

Captain SHAW: Will the Minister use his influence to see that in any trade agreements which may be entered into the interests of British agriculturists are not prejudiced?

Mr. ELLIOT: Yes, Sir.

Mr. G. GRIFFITHS: Can the right hon. Gentleman let us know where these new potatoes can be got? My folk cannot buy them.

Mr. LOUIS SMITH: In view of the fact that in previous years it has been stated that action has been taken too late, will my right hon. Friend take that question into consideration this season?

SOYA BEANS.

Mr. THORNE: 39.
asked the Minister of Agriculture whether any experiments have been made in the cultivation of the soya bean in this country; and whether the soya bean is or has been cultivated in any of the British Dominions, and with what success?

Mr. ELLIOT: Experiments in the cultivation of the soya bean have been carried out in this country for some years past, the largest and most recent being conducted in the favourable climatic conditions of 1933 and 1934, but it is too early to judge whether the crop can be grown commercially in this country. It is understood that the soya
bean has also been grown and with some success but on a limited scale in certain parts of the Dominions.

Sir PERCY HARRIS: Do the Government propose to give a subsidy to stimulate this industry, with a view to the employment of more labour?

FOOD PRODUCTION.

Mr. G. MACDONALD: 40.
asked the Minister of Agriculture the proportion of food for home consumption produced in this country and imported from abroad, giving separate figures for Empire production?

Mr. ELLIOT: I have no later information on this subject than that contained in the "Report on the Agricultural Output and Food Supplies of Great Britain" issued in 1929, and based on the years 1924–27. It was estimated that about 40 per cent. by value of our food supplies were home-produced, and nearly 22 per cent. were received from British countries.

Oral Answers to Questions — LAW REVISION COMMITTEE.

Major-General Sir ALFRED KNOX: 41.
asked the Attorney-General whether the Law Revision Committee now sitting has received, or is prepared to receive, public evidence from any of the classes affected by the laws which the Committee is engaged in codifying?

The ATTORNEY-GENERAL (Sir Thomas Inskip): The Law Revision Committee is not engaged in codifying any laws which affect a particular class. The matters referred to the Committee are certain legal doctrines affecting the population at large. If any person or body of persons desires to assist the Committee by tendering observations, I have no doubt that the Committee will be glad to receive them.

Oral Answers to Questions — EDUCATION (SCHOOL-LEAVING AGE).

Mr. D. G. SOMERVILLE: 42.
asked the Parliamentary Secretary to the Board of Education whether his attention has been called to the resolution of the National Free Church Assembly to the effect that any grants made to the non-provided schools to enable them to meet the special emergency caused by any raising of the school-leaving age should be understood to be exceptional; and whether he
can state the attitude of the other Churches towards this particular proposal?

Major GEORGE DAVIES (Lord of the Treasury): I have been asked to reply. The attention of my hon. Friend has been called to the resolution referred to. With regard to the last part of the question, he is not in a position to add anything to the answer given the day before yesterday to the hon. Member for Leigh (Mr. Tinker) and to my hon. Friend the Member for Dudley (Mr. Joel).

Oral Answers to Questions — BURGLARY (CONVICTIONS).

Mr. BERNAYS: 44.
asked the Home Secretary the percentage of persons convicted of burglary between the ages of 16 and 21 in 1924 and in 1934, or, if the latter figures are not yet worked out, at the nearest available date?

Sir J. GILMOUR: In 1924 the total number of persons convicted of burglary was 321, and, of these, 64, or approximately 20 per cent., were aged 16 to 21. The corresponding figures for 1933, which are the latest available, were 333 and 78, or approximately 23 per cent.

Oral Answers to Questions — SCOTLAND (SOLICITOR-GENERAL).

Mr. KIRKWOOD: 45.
asked the Prime Minister when it is proposed to fill the position of Solicitor-General for Scotland?

The PRIME MINISTER: This matter is now under consideration.

Mr. KIRKWOOD: Is it true that this appointment is being kept open in order to appoint Mr. T. M. Cooper, K.C., who has no former Parliamentary experience; and will the Prime Minister tell the House how it is that there are Members of Parliament with legal qualifications in the House who have been overlooked?

The PRIME MINISTER: I have said that this matter is under consideration.

Oral Answers to Questions — MINISTERS' POWERS.

Mr. McKEAG: 47.
asked the Prime Minister whether he can now make any statement as to when it is proposed to give effect to the recommendations of the Donoughmore Committee on Ministers' powers?

The PRIME MINISTER: I would refer the hon. Member to the answer given on the 7th March last on this subject in reply to a question by the hon. Member for Banff (Sir M. McKenzie Wood).

Mr. McKEAG: Can the Prime Minister give any indication of the date when it is proposed to give effect to the recommendations of this Committee?

The PRIME MINISTER: That point was covered in the answer to the hon. Member for Banff, which included these words:
The Report … raises a large number of important issues with which the Government cannot hope to find any opportunity of dealing as a whole in present circumstances

Oral Answers to Questions — HEAVY OIL DUTY.

Mr. D. G. SOMERVILLE: 49.
asked the Chancellor of the Exchequer, with regard to the new tax on Diesel oil, whether it is intended that railway Diesel engines shall be permitted to use untaxed fuel or not?

The FINANCIAL SECRETARY to the TREASURY (Mr. Duff Cooper): The proposed duty of 8d. per gallon will apply solely to oil used in road vehicles. Railway Diesel engines will be entitled to run on oil which has only paid the existing duty of 1d.

Mr. SOMERVILLE: Is not this giving a very big advantage to railway transport as against road transport—an unfair advantage?

Mr. LAMBERT: Will this tax apply to oil used in agricultural engines and machines?

Mr. COOPER: No, Sir; it applies to road vehicles only.

Sir P. HARRIS: Can the hon. Gentleman say why this preference is given to railways over road users, especially as road users have to make a contribution for the maintenance of the roads?

Mr. COOPER: The duty was introduced in order to prevent the competition which Diesel oil was carrying on with petrol in road vehicles, and the loss to the Exchequer which was resulting from that competition.

Mr. GODFREY NICHOLSON: Will my hon. Friend bear in mind the competition which Diesel railway engines carry on with coal?

Oral Answers to Questions — UNEMPLOYMENT.

UNEMPLOYMENT ASSISTANCE.

Mr. KIRKWOOD: 50.
asked the Financial Secretary to the Treasury whether he is aware that Edinburgh is being compelled to pay an annual contribution to the Unemployment Assistance Board of £79,000 under Section 45 of the Unemployment Act, 1934, as compared with £40,000 for Birmingham, which has twice the population of Edinburgh; will he state what is the total amount of contributions to be paid by Scottish local authorities compared with England and Wales; and whether he will consider the advisability of amending Section 45 of the Act to dispense with the necessity of contributions from the local authorities in view of the hardship which these contributions impose on the distressed areas in Scotland, England and Wales?

Mr. COOPER: Discussions with local authorities have not reached the stage at which individual contributions under Section 45 of the Unemployment Act, 1934, can be stated with precision, but I understand that Edinburgh's contribution will be approximately the amount stated in the question, while Birmingham's contribution will be somewhat less than the amount so stated. The total contributions of local authorities in Scotland will be, in round figures, £800,000 a year, and in England and Wales £2,000,000 a year. As regards the last part of the question, I would remind the hon. Member that the Act, coupled with the provisions in the Unemployment Assistance (Temporary Provisions) (No. 2) Bill now before Parliament, gives a net relief to local authorities at a present rate of about £1,600,000 a year for Scotland and about £4,000,000 a year for England and Wales, distributed in a way which, broadly speaking, gives the greatest benefits to areas where unemployment is high. The Government are not prepared to increase this generous measure of assistance by dispensing with local contributions.

Mr. KIRKWOOD: How can the Government expect at the moment their candidate standing for election in Edinburgh to be sent to this House when Edinburgh is asked to pay double what Birmingham has to pay? That is the vexed question which is being asked, and
I should like the Government to try and make themselves right with their own candidate who is standing at the by-election.

Mr. COOPER: The Government's policy is not controlled by such considerations.

Mr. KIRKWOOD: That answer, the House may have noticed, was rather too well prepared to be the right reply.

Mr. KIRKWOOD: 54.
asked the Minister of Labour whether he is aware that, prior to the advent of the Unemployment Assistance Board, householders on transitional payment were allowed travelling expenses from the public assistance committee officers when they had to travel some distance to hospitals or infirmaries to see their wives or children in these institutions, and that since the board has taken over that travelling allowance has stopped, as the officers, and the area officers of the board also, have no power to grant such allowances; and whether he will take steps to remove this hardship?

Mr. HUDSON: I am informed by the Unemployment Assistance Board that where an applicant is not himself in a position to meet such expenses the case can be met as one of exceptional need and that a number of such cases have been so dealt with. The board already has under consideration the issue of a general instruction to its local officers which will remove any misapprehension that may exist.

BENEFIT (BANK HOLIDAY).

Mr. LOGAN: 51.
asked the Minister of Labour whether he can now state if the unemployed are to get any special Jubilee grant; and, as 6th May is a Bank Holiday, will that day's pay be made to applicants registered at the Employment Exchanges

Mr. HUDSON: In answer to the first part of the question, I would refer the hon. Member to the replies given to the hon. Member for Sunderland (Mr. Storey) on the 15th April and the hon. Member for Faversham (Mr. Maitland) on the 18th April, and in answer to the second part of the question to the reply given to the hon. Member for Chester-le-Street (Mr. Lawson) on the 21st February.

Mr. LOGAN: In view of the reply which has been given, and which really contains no reply whatever, will the hon. Gentleman be good enough to answer the question now before the House? I want to know if a special grant is to be given, and also, if the Bank Holiday is a Bank Holiday under the law, whether any one in receipt of unemployment benefit will get any benefit on that day?

Mr. HUDSON: If the hon. Gentleman will look at the answers, he will find that they give full replies to both those questions.

Mr. G. GRIFFITHS: Is it not a fact that the part-time unemployed person who plays for three days on that week, including the Bank Holiday, will not get the benefit of the other two days, and that he will be cut out because of the Bank Holiday?

Mr. HUDSON: I shall be glad to answer that question if the hon. Member will put it upon the Paper.

Mr. LOGAN: Will the hon. Member kindly let us know whether it is "No" or "Yes," and then I will be perfectly satisfied without referring the matter to anyone else. There has never been a reply given in this House specifically to these questions, and I want to know whether the answer is "Yea" or "Nay."

Mr. HUDSON: I have given an answer to the hon. Gentleman's question.

Mr. T. SMITH: Does not the hon. Gentleman appreciate that it is in the interests of the unemployed themselves that this matter should be cleared up and a definite reply given?

Mr. HUDSON: Repeated questions have been asked on the point and repeated answers have been given. The question of whether or not in any particular circumstances a man is entitled to benefit is a matter for the statutory authorities and not for the Minister. The Minister, in answer to the hon. Member for Chester-le-Street (Mr. Lawson), gave a reply as far as was possible, and there is really nothing which I can add to the answer.

Sir P. HARRIS: Does not the hon. Gentleman realise that there will be a lot of discontent if the position is not
made absolutely clear to the men concerned, that is, the unemployed, and cannot he give the House a reply now so that they will know where they are?

Mr. HUDSON: I think that every un-employed man knows that the question of whether or not he is to receive benefit on a particular day is a matter for the statutory authorities and is not one to which either my right hon. Friend or I can give a full answer without knowing all the circumstances of the case, and that is made quite clear in the answers given by my right hon. Friend.

Mr. LOGAN: In view of the unsatisfactory reply, I beg to give notice that I shall raise this matter on the Adjournment.

MINERS' BATHS AND WELFARE INSTITUTES.

Mr. LUNN: 52.
asked the Minister of Labour if a caretaker of a miners' welfare institute or miners' baths is treated as entitled to unemployment insurance benefit in case of unemployment; and whether such cases have been considered by the statutory committee and a recommendation made thereon?

Mr. HUDSON: Broadly speaking, persons engaged in looking after miners' welfare institutes or miners' baths are regarded, in accordance with judgments given by the High Court, as being employed in domestic service and, therefore, not insurable where they are not employed in a business carried on for the purposes of gain. Both these employments, however, are among those with regard to which inquiries are proceeding with a view to the submission of a draft regulation to the statutory committee under Section 2 of last year's Act for the inclusion within the scope of the scheme of certain workers now excepted.

Mr. LUNN: Can the hon. Gentleman say when he is likely to have a report from the statutory committee on this question, which the hon. Gentleman promised some time ago should be considered by them; and, further, whether a man who is paying his contributions to the Unemployment Fund is entitled to have them refunded when he is not entitled to benefit?

Mr. HUDSON: I think the answer to the last part of the question is "Yes."
With regard to the first part of the question, I am afraid I cannot give any definite reply. As the hon. Member knows, the statutory committee have to deal with many important matters, including the question of seasonal workers, but I hope that they will get on with this matter at a fairly early date.

Mr. LAWSON: May I ask the hon. Gentleman to remind the statutory committee that the House was very anxious at the time of the passing of the Bill to have this question definitely settled and agreed to leave this rather small question to the statutory committee on the understanding that they would give it sympathetic consideration?

Mr. HUDSON: The hon. Member knows as well as I do that, although it looks simple, it is really a very complicated matter indeed when you come to try and find who does or does not come within the scope of this payment, and we shall seek a decision as early as possible.

Oral Answers to Questions — TOWER, OF LONDON (YEOMEN WARDERS).

Mr. WEST (for Mr. NEIL MACLEAN): 33.
asked the Financial Secretary to the War Office whether he is aware that the warders of the London museums and galleries have received an increase in their wage rates of from 1s. 7d. to 2s. per week; and whether the warders of the Tower of London may be given a similar increase, bearing in mind the fact that they are not permitted to have the right of collective bargaining, and therefore cannot press their own case for an increase?

The FINANCIAL SECRETARY to the WAR OFFICE (Mr. Douglas Hacking): I do not think that wage increases granted to museum and gallery attendants have any necessary relevance to the case of the Yeomen Warders of the Tower of London, who are serving under different conditions and are remunerated on a different basis. I am, however, arranging for the existing rates to be reviewed to see whether there are grounds for recommending any alteration on merits.

Oral Answers to Questions — SOUTH ESSEX WATERWORKS BILL.

Reported, with Amendments; Report to lie upon the Table, and to be printed.

Bill, as amended, to lie upon the Table.

Orders of the Day — WAYS AND MEANS.

REPORT [17TH APRIL].

Resolutions reported:

AMENDMENT OF LAW.

1. "That it is expedient to amend the law relating to National Debt, Customs, and Inland Revenue (including Excise), and to make further provision in connection with Finance."

TRANSFER OF SUM FROM ROAD FUND TO EXCHEQUER.

2 "That the sum of four million four hundred and seventy thousand pounds shall be transferred from the Road Fund to the Exchequer."

First Resolution agreed to.

Second Resolution read a Second time.

3.32 p.m.

Mr. PARKINSON: I beg to move, in line 1, to leave out "four million."
I move this reduction because of the statement made by the Chancellor of the Exchequer in his Budget speech a fort-night ago, when he said:
In spite of the reduction of the Horsepower Tax by 25 per cent. last year, the Licence Duty on road vehicles produced £800,000 more than it did in the year before. At the same time the outgoings of the fund were curtailed by the reduction in programmes which followed upon the crisis of 1931, and the result of that is that on 31st March last there was in the Road Fund a balance and an apparent surplus of £7,000,000. I say apparent surplus, because part of that, £2,530,000, was a debt owing to the Exchequer in repayment of the loans in 1931and 1932. The relevant Acts give the Treasury a discretion to appoint the times and conditions of repayment. As I did not require the money last year, I did not give the order for repayment until this year. Accordingly, that sum is included in the estimate of miscellaneous revenue which I have already given as £21,500,000. That leaves a balance in the Road Fund of £4,470,000. The need for curtailment of programmes has passed."—[OFFICIAL REPORT, 15th April, 1935; col. 1628, Vol. 300.]
Hon. Members may suggest that one might as well have moved to reduce the amount by the full sum, but they will admit that a reduction of £4,000,000 is a large item. I want the House to realise the purpose for which the Road Fund was established. We cannot say that
the fund is in any way specially dedicated to the Treasury. Right away from the beginning of the fund in 1909 it has been definitely stated that the whole of the money of the Road Fund should be used in order to develop and build the roads necessary for the country. Again and again from 1909 up to 1920 it has been stated that the whole of the fund should be devoted to road improvements. I want to take the mind of the House back to the early period of 1909. In his Budget speech of 1909 the right hon. Member for Carnarvon Boroughs (Mr. Lloyd George), who was then Chancellor of the Exchequer, made the following statement:
The brunt of the expense"—
that is, of developing the road service of the country
at the beginning must be borne by motorists, and to do them justice they are willing, and even anxious, to subscribe handsomely towards such a purpose, so long as a guarantee is given in the method and control of the expenditure that the fund so raised will not merely be devoted exclusively to the improvement of the roads, but that they will be well and wisely spent for that end."—[OFFICAL REPORT, 29th April, 1909; Col. 497, Vol. IV.]
That is a very definite declaration of the purpose which was in the mind of the Cabinet at the time they started the Road Fund. Further, in the Committee stage of the Finance Bill the Chancellor of the Exchequer stated that not a penny of this money would be touched for exchequer purposes but that the money received would all be spent upon the roads of the country.
Those are two declarations from which we cannot get away and we have no right to get away from them because they were made to the House with a view to putting into operation something which they thought to be very necessary. Further, in connection with the Roads Bill of 1920 a declaration was made by the then Parliamentary Secretary to the Ministry of Transport, Mr. Arthur Neal, who declared on the 2nd December, 1920, during the Debate on the Second Reading of the Bill:
This Fund is very much in the nature of voluntary taxation of a particular kind. The motorists have consented to raise money by this particular tax, on the definite undertaking that the money shall be expended in the improvement of roads. It is a national object which they are helping in that direction, and it is one which is most
urgently needed. The roads have to be brought up to a condition to deal with modern traffic and to be maintained in that condition. Therefore, this Fund, specially raised by taxation of a particular class, is specially safeguarded against its expenditure being diverted from the use for which it is raised to the relief of general taxation."—[OFFICAL RFPORT, 2nd December, 1920; cols. 1529–30; Vol. 135.]
These are very definite statements which must receive consideration by the House to-day. The Chancellor of the Exchequer in his speech the other day made it quite clear that there being a surplus on the Road Fund it was very close at hand for him to appropriate in order to build up his miscellaneous revenue. In 1926 the same matter was again before the House. In that case the House was dealing with the licences under the old horse power tax, and other things. The Chancellor of the Exchequer at that time said that as from the 1st April, 1926, one-third of the net proceeds of the excise duties on licences for motor cycles and private cars—the horse power tax—should be retained in the Exchequer and not be paid into the Road Fund. This sum was estimated to amount in that financial year to £3,500,000. This was a further appropriation of future revenues of the Road Fund. The Finance Act of 1926 further provided, in Section 43, that there should be transferred to the Exchequer from the Road Fund the sum of £7,000,000. This sum was taken from accumulated balances amounting to £19,500,000 and was an appropriation from the past savings of the Road Fund. Further, the Government announced that as from the 1st April, 1926, no further grants would be made by the Unemployment Grants Committee towards the cost of road and bridge works, and that as from the same date the outstanding liabilities incurred by the Committee on account of road and bridge works should be assumed by the Road Fund.
It appears to me that every time there has been an accumulation of money in the Road Fund, the Chancellor of the Exchequer has come along and put his hand upon it, saying "this is mine." I do not think that is quite a fair proceeding. Motorists pay this money for the definite purpose of improving the roads and bridges of the country, and they ought not to be called upon to contribute twice to the general revenue of the country. Local authorities, vehicles manufacturers and road users all opposed this
diversion of funds. In that year the Government deprived the Road Fund of something like £11,000,000. In 1927 it was rather worse, because, in that year the Chancellor of the Exchequer annexed the whole of the balance standing to the credit of the fund, no less than £12,000,000 and in the same year he expected to receive £4,000,000 as the one-third share of the horse bower tax, and on private cars and motor cycles. The Road Fund was also called upon to supply £8,000,000 on account of liabilities incurred by the Unemployment Grants Committee, and this meant that there was a total deduction from the Road Fund of £16,800,000 in 1927. The amount which was appropriated from the Road Fund in the two years 1926 to 1928 amounted to £28,000,000. No one will consider that this is the right method of procedure. That money was contributed for a particular purpose, and it should be used for that purpose, and not as a balancing power for the Chancellor of the Exchequer whenever he feels it to be necessary.
There has also been an increase in the burden of taxation in connection with roads and motorists. During the years from 1927 to 1934 the taxation has gone up by leaps and bounds at any rate in the later years, while the amount of money taken by the Exchequer has also gone up rapidly, while during the last four years the amount of the road grants has gradually diminished. At the same time the expenditure which was borne by local authorities was rather heavier than they should have been called upon to bear. They have to bear a certain proportion of the expenditure required for the improvement of the roads, and they look forward to considerable help from the Road Fund. The Road Fund, indeed, should be used for the relief of local authorities to a greater extent than it is at the moment, instead of the bulk of the money being taken by the Exchequer. In 1931 motor taxation was £44,500,000, of which the Exchequer took £20,750,000, while the road grants were £27,000,000. In 1932 the taxation was £57,500,000 out of which the Exchequer took £34,250,000, whilst the Road Fund grants were £28,750,000. In 1933 the taxation was practically £64,000,000 of which the Exchequer took £40,250,000 and the road grants were £23,000,000. Last year, 1934, the motor taxation was over
£71,000,000 and the Exchequer took nearly £43,000,000, while the total road grants were £19,500,000. Actually there has been an increase in the amount going to the Treasury and a decrease in the amount granted as road grants while the amounts which local authorities have been called upon to spend have not been eased at all.
We feel that this last raid of the Chancellor of the Exchequer upon the Road Fund ought not to have been under-taken. There is no reason for it. The road grants have not been at all in keeping with the requirements of the roads. We have a tremendous number of roads and bridges which require immediate attention, but they cannot be improved simply because local authorities have not the money, and when they put forward their schemes they do not get anything like what they expect to get from the Road Fund. The Exchequer appropriations during the years 1927 to 1932 have increased from £10,000,000 in 1927 to £43,000,000 in 1934. This money really ought not to be taken from the Road Fund. In his Budget statement the Chancellor of the Exchequer used a phrase to the effect that the need for the curtailment of programme had passed. If that is the case why should he annex the surplus in the Road Fund, which is there for the purpose of future development and improvement of the roads?
This action on the part of the Chancellor of the Exchequer compels a curtailment of programme, it holds up schemes which ought to be put in hand. I know a road which has a tremendous number of bends and curves which are dangerous to cyclists, motorists and pedestrians, but no improvement can be carried out simply because the local authority cannot get the money to do it. Now is the time when such work should be undertaken, labour is plentiful and money is cheap, and I do not see why the Chancellor of the Exchequer should take this money which should be used for developing and improving our roads in order to add to his balance. There are many great schemes which ought to be put in hand at once, and if we have secured 80 per cent. of our prosperity it is necessary that our roads should be put in proper order to facilitate the transport of goods. If this is to be repeated by every succeeding Chancellor of the
Exchequer because we have recovered 80 per cent. of the prosperity of the country—I do not understand exactly what that means—it means that the money which is being paid by motorists is not being used for the purpose of assisting the transport of goods.
In order to build up a reserve this House has deliberately overtaxed motorists. Many authorities are in need of grants, there are a large number of level crossings and hundreds of bridges in an unsatisfactory condition, there are thousands of unsatisfactory roads which ought to be taken in hand. The Chancellor of the Exchequer has mentioned that the Minister of Transport is inviting local authorities to submit a five-years plan of road construction and improvement. What is the use of issuing such an invitation when every time there are a few million pounds left in the Road Fund the money is taken by the Treasury? The system is wrong altogether. The Chancellor of the Exchequer may think it is all right, and the Minister of Transport may agree to the money being taken, but according to the statement of the Chancellor it does not seem that the Minister of Transport is very willing that the money should be taken. I do not think that the Minister of Transport put up a sufficient kick. He ought to have fought the Chancellor much harder than he did in order to retain the money for the specific purpose for which it was intended. In the Press this morning I find two statements. One of them is as follows:
Schemes which are under consideration by the Ministry of Transport for the replacement of level crossings by bridges will, if adopted, involve an expenditure of nearly £1,000,000. Only some eight crossing systems are involved, however, out of 14,500 which exist in this country. Particulars of the proposals cannot yet be given because nearly all of them are part of the five-year plan of Mr. Hore-Belisha, and are still being considered. The abolition of all crossings and weak bridges would cost nearly £100,000,000.
Whatever the cost may be, if the work is necessary in the interests of the trade of the country and the well-being of the people, the work ought to be done. Another statement in the Press was as follows:
A five-year road and bridge improvement programme is to be submitted to the Minister of Transport by the Surrey County Council, to the amount of £4,030,000.
Estimates for a five-year plan are going to mean a very expensive job, a more expensive job than the Chancellor probably expects. The right hon. Gentleman is not giving local authorities the chance of making a good start. He is first of all clearing the hen roost and even taking all the loose grit. He told the Minister of Transport that although he was taking this money and it was necessary to do so in order to balance the Budget or to have a surplus, if there came a time when the Minister of Transport required more money he could approach the Chancellor who would graciously see whether it was possible to give back any of the money. I do not know what the House thinks about that, but to me it seems like robbing a person and offering to return him a pound or two to go on with.
I hope that the Chancellor will not be quite so hard in future in putting stumbling-blocks in the way of the development of the roads of the country. Every penny of this £4,250,000 could have been spent on useful work that is necessary. At the present moment we have 2,000,000 unemployed and money cheaper than it has ever been before, and we are simply not taking the opportunities that are offered to us. There are hundreds of defective bridges and thousands of miles of defective roads in the country. It would have been far better for the Chancellor to have given employment to the workers so as to ensure greater safety on the roads, and, most important of all, to have kept faith with the promises made during the passing of the Road Acts of 1909 and 1920, that the Road Fund would be earmarked for road development only. I hope that the Chancellor will be able to do something that will put the Road Fund back to the state in which it was a month ago, and that he will tell the House that the taking of £4,250,000 is not to be a regular habit of the Treasury. There have been three raids upon the Road Fund, and it is about time that the people began to kick a little about it.

3.56 p.m.

Sir PERCY HARRIS: I can always appreciate the temptation to a Chancellor of the Exchequer to appropriate a convenient little nest-egg like this when he is anxious to present the nation with a satisfactory balance sheet, but the right hon. Gentleman has claimed, and claimed with some reason, to be a purist in finance.

The CHANCELLOR of the EXCHEQUER (Mr. Chamberlain): indicated dissent.

Sir P. HARRIS: The right hon. Gentleman does not make that claim and I withdraw my statement. Perhaps that accounts for this particular inroad into a Fund that is and has been allocated, from its inception, in principle at any rate, to the industry that provides the money. It is possible to build up a very strong case against a tax of this character. It is a tax upon industry. It brings us back to the old window tax in its limitation of a particular form of industry. A very great principle is involved here. This is an expanding industry. It is true that the Chancellor can argue with reason that so virile and powerful is the motor industry that it prospers in spite of the heavy burdens and taxes which year by year are laid on it. But we have to recognise that this is not the only country which has a big, strong, powerful motor industry. We have to go with the times. Other countries are serious competitors with our motor industry, and it is argued that if we are to hold our own every encouragement within reason should be given to this powerful industry.
There is, perhaps, an even more important point of view. Motor transport is essential to modern industry; its speed and efficiency and cheapness are an essential item in productive industries that Are in competition with the world. That applies particularly to our heavy industries. The other day another Minister came to the House and asked us to take the exceptional course of imposing a 50 per cent. protective duty on iron and steel, and in due course that proposal was confirmed. I am credibly informed that one of the biggest factors in the cost of production of iron and steel, almost as big a factor as the direct cost of labour, is the cost of transport. One of the reasons why Belgium is able to put up such severe competition against us on the heavy side of the iron and steel industry is the advantage that she enjoys in the cost of transport. It seems unfortunate that just at a time when industry is recovering—some think that the recovery is by no means permanent and that we are certainly not yet out of the wood—the Government recognises the principle that a tax of this kind on industry, which can only be justified if it
be spent in the interests of the industry, should be diverted to the ordinary revenue purposes of the year.
The very fact of the number of motorists on the road is the reason, of course, for the large and increasing revenue coming from this source. The large increase in the number of vehicles on the road makes it more urgent every year, and more vital, to improve the roads, and spend the money for the purpose for which it was originally voted and allocated. All round London, and in the Midlands and in the Lancashire area, in spite of very large expenditure on road improvement, the congestion is serious, and the need for road improvement increases every year. It is very unfortunate, and very remarkable, that the Minister of Transport and his Parliamentary Secretary are conspicuous by their absence. They are the natural defenders of this particular source of revenue which properly belongs to them, and it is surprising that, without a word of complaint, this great advertiser, the Minister of Transport, who stands up to be the champion of this industry, and claims to be its particular protector, does not even raise his voice in protest, and does not even take the trouble to be present in the House and justify the handing over of this money to the right hon. Gentleman. Apparently, he is quite a willing conspirator with the right hon. Gentleman.
It is very significant that at this very moment we are informed that the hon. Gentleman is in conference. Even as late as yesterday he was in conference with the right hon. Member for Carnarvon Boroughs (Mr. Lloyd George), to whom we owe this fund, whose imagination, whose foresight anticipated the great expansion, the need for which expansion on road improvement initiated this particular type of revenue. We understand that the purpose of the conference is to see if, by schemes of improvement, we can get men off the Unemployment Fund into productive industries. I am glad to see the Minister of Labour present. He knows what a constant, vital problem this is, and how difficult it is, in spite of expanding trade, to find for this great army of unemployed useful and productive work. Here is the simplest and natural source of revenue, the machinery available to provide the
character of work which is the most easy to absorb unemployed men. It does not require great skill; it is easy to expand. The trouble always has been that the Government hesitate to embark upon any great scheme of public expenditure which would involve a charge upon the public revenue. But in this fund, without imposing an additional tax, without raising capital by borrowing, here is a source of revenue at hand, and, at the same time, there are schemes only waiting for the money to be put into operation. In London for many, many years, we have been waiting for schemes of bridge construction, particularly the Charing Cross Bridge scheme. That scheme was passed as long ago as 1930, but it has been held up altogether on one justification only—that the revenue was not available from the Road Fund.
The right hon. Gentleman the present Minister of Labour was Minister of Transport. He knows how constantly good schemes which are brought forward by local authorities to his Department for financial assistance are being held up only because of the danger of an additional charge on the local rates. In London there has been an increase in the local rates during the last 12 months. At the same time, in spite of the increased rates, in spite of the present expansionist policy in London, road schemes are being held up because of the difficulty of getting the necessary money from the Road Fund of the Minister of Transport. I suggest that this is a retrograde policy, a policy which cannot be justified. It is a bad precedent. It is unsound finance, and, in the end, the revenue which the right hon. Gentleman is now taking will have to be made good in future years. It is no excuse to say that this is an expanding industry. The more the industry expands, the greater is the need of road improvement. I, therefore, think that the Amendment is justified, and I believe it will receive support, at any rate in principle, from all sides of the House.

4.7 p.m.

Sir JOHN POWER: The last speaker seemed to claim universal application for his ideas, but I do not think he can claim universal support for the arguments he put forward. No one denies that the construction of motor roads is a great necessity, but I think it has yet to be proved that the allocation of this money has in any way impeded the construction of
roads. It was used, as I understand, and as the Chancellor of the Exchequer told us, because it was a surplus lying unused, and it was appropriated for a very useful purpose, and gives a great measure of relief to thousands of small Income Taxpayers in this country. I would like to ask my hon. Friend opposite, does he claim that these taxes levied upon motorists are to be used entirely for the benefit of motorists or roads, because, if so, then I would like to ask why, taking that argument a little further, the Income Tax collection should not be devoted entirely to the benefit of the Income Tax payer and the Super-tax equally to the Super-tax payer? I would like to hear the hon. Gentleman explain his views a little more fully, and perhaps I may have the opportunity on some future occasion. All that I have to say in conclusion is, that so far as I am concerned, I am very glad indeed to see the available funds that were not being used being put to a useful purpose.

4.9 p.m.

Captain STRICKLAND: I rise to give such support as I am able to the Amendment moved on the other side of the House, because I believe, on grounds of public policy, on the ground of the honesty of pledges given in the past, this House would be wise indeed to protest emphatically against this further raid on a fund which was specifically set aside for a particular purpose. The hon. Gentleman who has just spoken instanced the case of the Income Tax. I would like to ask him whether at any time there was a pledge given to the Income Taxpayers that if they consented to have a tax put upon their incomes, that tax would be devoted entirely to the benefit of those people who paid it? In the case of the Road Fund, however, it was a specific pledge given to motorists, with their sanction and approval, that the whole of the money raised by this means should be devoted to the improvement of roads, which, in those days, were totally inadequate to meet the growing demands of the road users.

Mr. CHAMBERLAIN: What was the date?

Captain STRICKLAND: The pledge was given in 1909, when the Road Fund was originally started. I am speaking from memory, and if I am wrong about the date, no doubt my right hon. Friend
will correct me. Since he has asked me a question, I will ask him whether he will deny that the pledge was given that this money should be devoted to road construction, road maintenance and road improvement in this country? Indeed, the pledge was more specific. The pledge given originally was that it should be used for road construction. Road maintenance and road improvements were added to it afterwards, again with the sanction and approval of motor users. The fact which we have got to face—and it is being brought more and more to the notice of many Members of this House who have not long experience of the House—that no pledge given by any Minister in this House has the slightest value in future years unless it is put definitely into the terms of an Act. While I quite agree that there may be extensions of the ambit of the tax itself, in any case it must be remembered that this tax was imposed specifically for one purpose, and that was the improvement of the roads of our country.
The second question I would like to ask the Chancellor of the Exchequer is this: Is he satisfied that at present the whole of the roads of the country are adequate and sufficient for the growing use made of them by motor users? No one can dispute the fact that the introduction of the road vehicle has proved a very great and increasing benefit to people who, in olden days, were far less benefited by the old means of locomotion. But the point is that, with the growing use of roads, there is an increasing demand for better roads than we have at present. A case in point occurs to me at the moment. A few weeks ago I asked whether, in the interests of the safety of the roads, it would not be possible to have a line marked across the road to warn a motorist when approaching a restricted area. The reply was that this would cost money. Exactly so. I did not suppose it was going to be done without costing money, but here we had the money available, and money taken out of the pockets of motorists for the very purpose I was asking—the improvement of the roads. The reply was "We have not got the money"; but, says the Chancellor of the Exchequer, "Here is £4,000,000. I want some more money to make up the amount of my Budget, and I am going to take this sum." If the
cotton manufacturers or the steel manufacturers of this country were called upon to contribute a levy, say, for the purposes of scientific research, and this was done by private donations, and the money was collected from the manufacturers for this particular purpose, I can imagine the great indignation if any such private organisation, or semi-public organisation, were to turn round suddenly and say, "Yes, we have collected this money for scientific research, but we now propose to use it for docks or something else." I can quite believe that, in such a case, an injunction could be obtained against them for misappropriation of funds.
I want to enter my protest. I would not do it if I thought the money was not needed in the Road Fund. But no one can claim that our roads are perfect or anything like it. The hon. Member for Wigan (Mr. Parkinson) referred to the question of weak bridges. We have been told that there are bridges all over the country which are not safe for motor traffic. Yet the money was here available in the Road Fund for dealing with that matter and we are taking it out of the Road Fund and devoting it to the general purposes of the Exchequer. If it is desired to tax motorists as motorists, for goodness sake drop the theory that the money derived from that taxation is for Road Fund purposes and say frankly, "We are going to tax this new means of locomotion right up to the hilt and do everything we can to put penal taxation upon it, because we want the money and we are going to have it." That would be an honest way of doing it. But to ask the motorist, year after year, to contribute to the specific purpose of developing the roads of our country and then to apply the money in other ways, is altogether wrong.
When we go into our villages, our country towns and our great centres of population like London, we find that the means of transport from one point to another are totally inadequate. Circular roads have to be built around congested centres. Traffic is being held up and there is a crying need and demand that more money should be spent on the development of our roads. In those circumstances it is not right or fair or honest to come to the House and say, "We know the money is needed for these purposes but we are going to devote it
to other purposes. "An hon. Member opposite asked where was the Minister of Transport. Is it not his duty to be here and to declare what he feels to be the necessity of the time as regards the roads of this country? I think it is really a want of courtesy, when such an important point as this is under discussion that neither he nor his representative should be here. It is not the first time that this sort of thing has happened and I hope the House will enter an emphatic protest against the treatment which is being given perpetually to the great motor industry. We have instances of it day after day. We have an instance this afternoon of the sort of thing that is happening with regard to differential treatment in the matter of taxation between road-users and the railways. That is an example of what is going on and it would appear that the whole purpose is to smash as far as possible our great road industry. I wish to enter the strongest protest against what I regard as a dishonest proposal to take this money from the Road Fund and I support the Amendment.

4.20 p.m.

Mr. THORNE: I also enter my protest against this money being taken from the Road Fund and I am pleased that you, Mr. Speaker, have given us the opportunity, when raising the question of the Road Fund, to bring forward also the need for applying this money to road purposes. It is a difficult thing in a discussion of this kind to divorce those two subjects and it is plain that if this money were not taken from the Road Fund it would be used for the purposes for which that fund was established. Anyone who looks up the record of what happened when the Road Fund was established will find that it was stated definitely that the fund was to be used for widening the main arterial roads, for cutting off some of the dangerous corners in the rural areas and for widening a number of narrow roads throughout the country. I do not think the Chancellor of the Exchequer will deny that that was the original purpose of the fund, and we on these benches and other Members as well, entered a very strong protest when the right hon. Gentleman the Member for Epping (Mr. Churchill) first made a raid upon the Road Fund.
I am not surprised that the Minister of Transport is not in his place on this occasion. It must have been very interesting to hear the discussion between the Chancellor of the Exchequer and the Minister of Transport on this subject. I assume that there must have been some discussion between them when the Chancellor of the Exchequer suggested that this sum should be taken from the Road Fund for the purpose of making concessions to the small Income Tax payers. I do not know whether the Minister of Transport entered any protest, but if he had protested seriously and had refused to agree to this proposal it is to be taken for granted that he would have tendered his resignation. Perhaps that is one of the reasons why the Minister of Transport is not present. He would have come into conflict with the Chancellor of the Exchequer on the question of taking this money from the Road Fund.

Mr. CHARLES BROWN: But this is a united Government.

Mr. THORNE: In some things perhaps, but not in all. We in West Ham have a little growl to make on this matter and no doubt other industrial centres have similar grievances. We have a roadway there, a main road running from Aldgate to Romford, on which there is a bottleneck midway between Bow Bridge and Stratford Market Railway Station. A certain portion of the road has been widened and all motorists will agree that it has been a great improvement. For some time we have been in communication with the Ministry of Transport with a view to getting permission to widen Stratford High Street all the way down to Martin Street. The Minister of Transport when he came down to open the new highway at the Silver town road partially promised that he would give favourable consideration to the scheme for the extra widening. I am under the impression, however, that when we make another effort to get that concession the Minister will say, "It is very unfortunate but it cannot be done, because the Chancellor of the Exchequer has 'pinched' £4,000,000 from the Road Fund and there is no balance left."
When the Chancellor of the Exchequer replies in this Debate he will probably say, "Well, gentlemen, if I am not allowed to take this £4,000,000 from the
Road Fund I have to find fresh money somewhere. In what way am I to find it? "I can suggest to him a way of finding fresh money without any trouble. Ever since I have been a Member of this House I have stated my definite opinion, both inside and outside the House, that in connection with every form of taxation there is always a way of shoving the burden on to the consumer—with one exception. There is one tax which cannot be shoved on to the consumer and that is Death Duties. Therefore, if the Chancellor wants to raise this £4,000,000 he can raise it in Death Duties and nobody will feel the effect because people cannot miss money which they have never had. If the Chancellor wants to raise revenue without imposing fresh burdens there is a method of doing it.
During the last few weeks we have had many complaints from motorists in this House about the state of the roads and dangerous turnings and crossings and so forth and yet with the exception of the hon. and gallant Member for Coventry (Captain Strickland) there is not a single Member opposite who has entered any protest against this money being taken from the Road Fund. I am not sure that even the hon. and gallant Member will go into the Lobby with us when it comes to a Division upon this matter. But I think the time has arrived when there ought to be a strong protest against any Chancellor of the Exchequer, to whatever party he may belong, taking money from the Road Fund. As far as I am concerned, when the party to which I belong is sitting on the other side of the House, if our Chancellor of the Exchequer attempts to take money from the Road Fund I shall protest against it exactly as I am protesting now.

4.27 p.m.

Mr. McKEAG: I do not want it to be thought for one moment that I subscribe to the fallacious economics of the hon. Member who has just spoken but in the main I find myself on common ground with most of those who have already taken part in this Debate. I subscribe in no uncertain fashion to many of the strictures to which utterance has already been given in regard to this matter. Moreover, it seems to me very regrettable that at the very time when a Cabinet Committee, in conclave with the right hon. Gentleman the Member for
Carnarvon Boroughs (Mr. Lloyd George), is considering proposals for national development, the Chancellor of the Exchequer should have chosen to commandeer this substantial sum from the Road Fund. The result of these appropriations must necessarily be to affect very adversely the efforts of the Minister of Transport to reduce the toll of the roads. I think all parties in this House admire the energy, enterprise and the initiative with which the Minister of Transport has tackled the great and difficult task with which he was entrusted some time ago. It seems a pity that, just as some measure of success appears to be attending his efforts, he should be in any way crippled by lack of funds and his humane work circumscribed.
One has rather vivid recollections of the manner in which the Chancellor of the Exchequer made the announcement of this raid during his Budget speech. It amounted to the arch-beaconeer being made to stand and deliver by the archbuccaneer—and the Road Fund surplus faded away. It is necessary to go back a little into political history to ascertain the exact terms of the pledge that was given that the Road Fund taxation should be utilised for the purposes for which hon. Members claim the Fund was established. I make no apology for reminding the House of the specific terms of the pledge which was given by the right hon. Gentleman the Member for Carnarvon Boroughs in 1909. He said that the money raised by this taxation
shall be placed at the disposal of a central authority who will make grants to local authorities for the purpose of carrying out well-planned schemes which they have approved for widening roads, for straightening them, for making deviations around villages, for allaying the dust nuisance, and I should also propose that power should be given to this central authority to set aside a portion of the money so raised for constructing, where they think it necessary and desirable, absolutely new road."—[OFFICIAL REPORT, 29th April, 1909; col. 497, Vol. IV.]
There can be no doubt of the specific nature of that pledge. Not only that, but the distinguished relative of the right hon. Gentleman himself, the Member for West Birmingham (Sir A. Chamberlain), speaking in the same Debate, gave utterance to these illuminating words:
Our attitude towards the tax will depend upon the answer to that question. If
it is going to the support of the roads we think it is a very fair proposition; if it is intended to take it for general revenue then we shall oppose it."—[OFFICIAL REPORT, 29th April, 1909; col. 600, Vol. IV.]
Let us go through the years until we come to 1920. We find the same right hon. Gentleman then saying that he did not propose to claim any share of this taxation, referring to taxation raised by the Road Fund for the Exchequer. Ever since then we have had raid after raid upon the fund with a consequent reduction in the amount of money available for the purpose for which it was originally intended. Figures for 1933–34 give a clear indication that the motor industry is being over-taxed. The amount raised in that year by motor taxation was £67,000,000. Only £25,500,000 of that money was paid into the Road Fund for the purposes set out for the fund. No less than £41,750,000 of that was used for general Exchequer purposes. There is another way of looking at it. Of that £67,000,000 which was raised by motor taxation the only amount expended upon roads was £52,000,000. Therefore, it seems that motor taxation was in considerable excess of expenditure on the roads. This shows either that motor taxation is excessive or that work on the roads is not being sufficiently carried out.
The hon. Gentleman who spoke a few moments ago made reference to certain schemes in his own constituency which everyone there no doubt desires should be carried out. There are schemes all over the country clamouring for attention. Take the City of Durham. We are very proud of our ancient historic city, but it suffers from the very fact that it is ancient. We have very narrow roads in the centre of the City. One is only 12 or 13 feet wide in parts, and it is impossible for two vehicles simultaneously to pass. A few days ago one vehicle was held up in the middle of the street with the result that the whole of the business of the City was dislocated until the vehicle which had broken down had been removed. I have here a cutting from a newspaper referring to the particular incident. This is what it said. It is quoting an Alderman of the City of Durham speaking immediately afterwards. He says:
If the Minister of Transport had been in Durham this morning and seen the block of traffic stretching considerable distances in each direction with the whole of the
business of the City dislocated and traffic North to South and East to West held up there would have been no question in his mind as to which scheme in Drham should be given priority.
For some years schemes have been considered by the Ministry of Transport for alleviating this trouble. We are anxious for a new bridge and road to be constructed to relieve this inordinate congestion which takes place day after day. But the very fund which should be utilised for this purpose is being raided for general Exchequer purposes. I quote these instances as evidence that there is still much to be done in the way of constructing new roads and widening old ones. I wish to make two statements to the right hon. Gentleman. First, by excessive taxation we are retarding the natural development of the motor industry. Secondly, at this time and in the circumstances which obtain to-day it is to say the least unfair to starve the fund and deprive it of money which should be unquestionably utilised for the purposes for which it was inaugurated. I hope the protests which have been made this afternoon from Members representing every party in this House will not have been made in vain.

4.37 p.m.

Dr. ADDISON: I think that this Debate is very interesting in a personal or psychological sense. The right hon. Gentleman has so impressed upon everybody the fact that he is an apostle of orthodoxy in finance that my hon. Friend below the Gangway actually began his speech by describing the Chancellor of the Exchequer as a purist in finance. I must congratulate the right hon. Gentleman upon the success of the facade which he has erected. I confess if we search his record it does not seem to provide quite the abundant justification which my hon. Friend imagined. I have in mind the example which he and other preceding Conservative Chancellors of the Exchequer have set to some future Socialist Chancellors of the Exchequer in this matter. In reply to the hon. Member behind him, he himself interjected a question as to the statement of the purpose of this fund. I may remind him of the statement of the Parliamentary Secretary to the Ministry of Transport, Mr. A. Neal, when the right hon. Gentleman the Member for West Birmingham (Sir A.
Chamberlain) was Chancellor of the Exchequer in 1920. He said, on the 2nd December, in the House>:
This fund, specially raised by taxation of a particular class, is specially safeguarded against its expenditure being diverted from the use for which it is raised to the relief of general taxation."—OFFICAL REPORT, 2nd December, 1920; cols. 1529 and 1530, Vol. 135.]
Nothing could be more specific than that pledge. It was a long time after the tax was first imposed. It was after the War when this pledge was given to the House of Commons. We have seen a diluted form of repudiation of our obligations in the matter of international debt, and now we are seeing a very gross and undiluted form of confiscation. I do not wonder that the Minister of Transport is not here. My hon. Friends have wondered what sort of communication took place between the Minister of Transport and the Treasury. I can well imagine what it was like. It was no doubt a memorandum from the Treasury, and, as we all know, those of us who have found ourselves in conflict with the Treasury from time to time, the only way you get anything from the Treasury is by fighting for it. The Minister of Transport apparently was not in a position to fight the Treasury. Therefore, they get away with this additional piece of piracy and repudiation of a national undertaking. It is nothing less than that—gross repudiation of an honourable undertaking on the part of the British Government. It is utterly and completely dishonest. I can well imagine the headlines there would have been if this kind of thing had been perpetrated by a Labour Chancellor of the Exchequer. The two preceding Tory Chancellors of the Exchequer were guilty of this piece of theft, and now it has been repeated again.
I have no doubt my fellow countrymen will take note of this repeated diversion of funds from purposes for which they are created. I think it has gone much farther than a good many people perhaps understand. Everywhere we go about the country we see very nicely erected fences standing back from the roadside where at one time or another the local authority, perhaps under the inspiration of some other Minister of Transport, had decided that a piece of road widening is desired. We say, "What a sensible idea it was to propose to widen the road
that much." But we come up against so-called economy which has prevented this happening, with a result that is altogether amazing when we look at it in the aggregate. Last year £71,000,000 was raised from this industry in one form or another by taxation. I have not got the precise apportionment of that sum; but take the sum in the year before. In that year £63,926,000 was raised from this industry. Remember the pledge that underlay this taxation. Of that amount the Road Fund grants were £23,056,000. The Treasury, which originally was only to take one-third, took, including something from the oil duties, £40,000,000. By so much as the Treasury appropriates money from this fund so far as maintenance is concerned, by so much it increases the burden on the local ratepayers, because the road expenditure I find for the last complete year of which I have figures borne by the rates was £39,000,000 as against £23,000,000 out of the Road Fund, although in the various motor taxes in that year the aggregate contribution was £63,000,000. If there be a case where it is justified that the money should be spent for the purpose for which it was explicitly levied it is here, for two reasons. The first is that the diversion of the money from that purpose means that the local ratepayers have to pay more in rates. The second is that it means that none of the improvements so urgently required can he undertaken. As a result of the levy imposed by the Treasury during the last two or three years, this fund in 1933–34 had accumulated an unspent balance of £4,700,000. Notwithstanding that unspent balance, the total amount spent in road improvement, as apart from maintenance, was only £4,600,000.
In spite of all that we hear about weak bridges and the necessity of widening roads for the greater traffic that they bear, the unspent balance was more than the whole of the money spent on road improvement. Everybody knows why that was the case. It was because various schemes required the sanction of the Treasury, and, whether the Treasury at that time got its mind on the growing source of plunder or not, I do not know, but we do know that the ordinary departmental procedure requires Treasury sanction to the proposals as they come
along and that the proposals were cut down or refused. So, greatly owing to this starving of road improvements, and notwithstanding the accumulated surplus, we arrive at the position in which there is something really worth stealing; the Treasury sees it there and grabs it. I do not wonder that the Minister of Transport is not here. I am sorry for him, because a more dishonourable transaction does not stand in the records of interdepartmental history. The money is wanted for the roads, it was provided for the roads, and it has been taken from them in breach of the most explicit and binding Government undertakings; and I hope that every Member who values public honour will protest against it.

4.49 p.m.

Mr. CHAMBERLAIN: The hon. Member for Wigan (Mr. Parkinson), who moved this Amendment, based his criticism on two grounds: first, on the ground of principle, namely, that money which had been raised for the purpose of road improvement and in respect of which pledges had been given, should be used for that purpose and should not be diverted to other purposes; and, second, on the ground that by taking this amount of £4,000,000 from the Road Fund works of improvement and construction were being rendered impossible. The right hon. Gentleman the Member for Swindon (Dr. Addison) has described the alleged breach of principle in terms so extravagant as to rouse the scornful laughter of hon. Members. It is an extraordinary thing that the right hon. Gentleman, who is so moved by this breach of principle that he describes it as dishonourable, dishonest and a breach of honourable pledges, is supporting an Amendment which sanctions the diversion of £470,000 from the Road Fund. I should have thought that the matter of principle would apply just as much to the £470,000 as to the £4,000,000.
I will deal with both these grounds of objection. Let me say, first, that pledges made in 1909 are quite irrelevant to the present case. In that year the Road Improvement Fund, as it then was, was a fund fed not only by the licence duty, but by the motor spirit duty. After the War the whole framework was changed and the new Road Fund was set up into which was paid only the licence duty and no longer the motor spirit duty. Therefore, any pledges that
are to be considered and that are relevant to this discussion must be pledges that were given after and not before the War. My second point is this. Really, it is ridiculous for anybody, and most of all for the right hon. Gentleman who has been a Cabinet Minister, to pretend that any Minister can pledge succeeding Parliaments for all time to carry out a pledge which he might give as to the destination of particular taxes. That is to assume that a temporary minister of the day would have control over the whole future discretion of Parliament. No House of Commons would ever sanction that.

Dr. ADDISON: The right hon. Gentleman is not fairly representing the position. These are taxes paid into a fund created for a special purpose. If the Chancellor of the Exchequer wishes to levy additional taxes, he can devote them to general purposes quite properly, but he says so at the time.

Mr. CHAMBERLAIN: The right hon. Gentleman is mistaken in saying these are taxes paid into the Road Fund. They are paid into the Exchequer, and they are issued by the Exchequer into the Road Fund after certain deductions are made. [HON. MEMBERS: "Oh!"] That is a very important point. The taxes are not paid into the Fund, but into the Exchequer. They are part of the revenue of the Exchequer, and it is only because of a decision of Parliament that the Exchequer issues to the Road Fund a portion of the money that is paid into the Exchequer from licence duties. The right hon. Gentleman has not said anything which in any way alters what I said before. No Minister can pledge succeeding Parliaments. He can give pledges as far as he is concerned and he may on behalf of the Government give pledges which will bind that Government so long as it is a Government, but it is not possible to prevent Parliament taking any decision it likes in future or completely reversing decisions that have been taken in the past and diverting taxes from one purpose to another.
This is not a new question. My predecessor, my right hon. Friend the Member for Epping (Mr. Churchill), made two raids, as they are called, of a considerable magnitude: £7,000,000 in 1926, and £12,000,000 in 1927. It is rather interesting to observe that, although there was on the occasion of the first raid, a full
discussion on the question of pledges, in 1927, when a bigger raid was made, the matter of pledges was not discussed. Parliament was satisfied a year before, and the question was not discussed again. My right hon. Friend dealt with the suggestion made by one speaker this afternoon that this tax is a voluntary action on the part of the taxpayer. What a position we would be in if all of us were only called upon to pay taxes if we voluntarily and freely agreed to do so. He pointed out that you could not describe as voluntary an action in respect of which, if you did not take it, you would be liable to be sent to prison. The suggestion that here was an honourable bargain between motorists as taxpayers and the Government of the day that if the motorists consented to pay their taxes they would be devoted entirely to the service of the roads, is a fantastic description of the transaction. Where is the dishonesty?

Dr. ADDISON: You do not levy taxes voluntarily at all.

Mr. CHAMBERLAIN: That is exactly what I am saying. The motorists have to pay the taxes, and I say that the House of Commons has a perfect right, if it chooses, to take every penny of that taxation. The hon. Member for South-West Bethnal Green (Sir P. Harris) appeared to be under some confusion of mind. He represented this diversion of balances in the Road Fund as a tax upon industry. He said that industry was overtaxed, and so did the hon. Member for Durham (Mr. McKeag). This is not imposing a fresh tax upon industry, and, if I were to follow the advice of the two hon. Members and reduce the taxation of the industry, as in fact I did last year, there would be less money for the Road Fund and not more, because it is the taxation of the industry which feeds the Road Fund. Therefore, the hon. Member, in speaking of this as a tax upon industry, was surely for a moment forgetting what the actual subject of the Amendment was.

Sir P. HARRIS: Although it is a tax on industry the money was spent on the industry, for they got it back on improved roads which saved the strain on their machines.

Mr. CHAMBERLAIN: The hon. Member said that it was a new tax on industry,
and I am pointing out that, whether this £4,000,000 remains in the fund or is taken out of it, it makes no difference to the tax on the industry. When the right hon. Gentleman suggests, as he did in his ingenious manner, that the Treasury had been deliberately starving the grants from the Road Fund for the construction and improvement of roads in order that a surplus might be accumulated which the Treasury could take, he is painting a fancy picture. I will tell him what is the truth about it. The roads have been starved, if you like to use that phrase—I say that the programme of improvement has been cut down—because of the crisis brought about by the extravagance of the right hon. Gentleman and his colleagues when they were in office. If it were possible to-day to stop that curtailment and on the contrary, to reverse the motion and to begin a new programme of road construction and improvement on a bigger scale than any programme in any five years up to the present, that would be due to the policy of the Government which has helped to make the motor industry flourish and provide a Fund which would enable us to carry out that programme.

Mr. LAWSON: What is this programme?

Mr. CHAMBERLAIN: Invitations have been sent by my hon. Friend the Minister of Transport to local authorities to submit to him a programme of road construction to cover a period of five years. It is that programme to which I referred.

Mr. LAWSON: What grounds has the right hon. Gentleman for describing this as bigger than any other programme put in operation previously?

Mr. CHAMBERLAIN: I only claim it because that is our intention. It is true that the programme has not yet been disclosed and that we have not yet had all the proposals, but we do insist that the programme will be bigger than ever before.

Mr. LAWSON: I am sorry to interrupt the right hon. Gentleman, but he made a statement which taken by the Press may have led the public to understand that the Government actually had a programme which was practically ready on a bigger scale than had been prepared
previously. I wanted to know just what it is, and apparently it is not in existence.

Mr. CHAMBERLAIN: I am much obliged. I certainly do not wish to mislead anybody. I do not think anybody can be under any misapprehension because the circumstances have been already stated over and over again, both in the House and outside, and I thought everyone was aware of what was going on—that we had invited local authorities to submit local programmes. Some have come in and some are not yet complete, but we hope to be in a position before very long to examine them as a whole, so that we may have before us a five years' programme.
Does the utilisation of this balance of between £4,000,000 and £5,000,000 for the purpose of relieving the small income taxpayer, who is very often the small motorist too, mean that we are thereby crippling the road programme? I say emphatically no. I have pointed out already that we are about to embark, when we have these proposals before us, on a new programme; but after you have got your programme it does not mean that the money is instantly spent. There is a considerable amount of preparation which has to be done before you can actually spend the money. The commitment is the important thing, and it is only after the commitment is made that it begins to mature, and as it matures the money will be coming into the Road Fund.

Mr. G. GRIFFITHS: In five years there may be another Government who would turn it down.

Mr. CHAMBERLAIN: No. If local authorities have undertaken a project for which they have been promised a contribution from the Exchequer it is not possible for another Government to come along and say: "We propose to take the money for another purpose." That is a commitment which must be fulfilled, and no Government would dishonour a commitment of that kind entered into by its predecessor. I do not think anybody need be afraid of anything of that kind. What I say is that at the rate at which the Fund is receiving income from the licence duties we anticipate that there will be ample provision to meet the new commitments as they mature, but I will remind the House once again of the statement
I made when I announced that this money was going to be taken, that if more money were required for the roads than the Road Fund was able to supply, I considered that in view of my action in appropriating for the purpose of relief of taxation this temporary surplus lying there at present unused, the Minister of Transport would have a perfect right to represent to me that further provision should be made in order that these schemes should not suffer.

Sir P. HARRIS: Is that an undertaking to the House—that if the Fund is short for necessary schemes, the Government will make it up from other sources?

Mr. CHAMBERLAIN: I prefer to leave it just as I put it. I cannot make a statement of this kind in this House without being committed by whatever the implications of that statement are. I do not want to amplify what I have said, because one does not know now what the conditions may be, but I think the purport is fairly clear. I have shown, I hope, in the first place that there has been no contractual pledge between the taxpayer and the Government and any accusation that this is a repudiation of an undertaking entered into is fantastic and without foundation. In the second place, I hope I have equally convinced the House that there is no foundation whatever in the allegation that by taking this balance for the purpose to which I have allotted it I am in any way jeopardising the proper development of our road system in the immediate future.

5.7 p.m.

Mr. LAWSON: I do not want to deal with questions of pledges, which my hon. Friends have raised very effectively, but I must say that there is one thing about which I am very much concerned and almost alarmed. It is an omission from the speech of the Chancellor of the Exchequer. It seemed to me that he neither did meet, nor attempted to meet, the representations of Members of the House, not only on this side but on his own side, to the effect that the taking of this money was an indication that there was not very much hope of dealing with unemployment on a large scale of public works in the future. I did think that the right hon. Gentleman would in some measure try to meet that argument.
It is true that he has said that he gives a pledge that if the Minister of Transport says that in the future he wants money for purposes of the roads his application will receive serious and sympathetic consideration. But everyone who knows anything about the work of the House and of Government Departments knows very well that the Chancellor of the Exchequer cuts exactly the measure of the cloth that a particular Minister has to use for the making of a suit. The Minister of Transport will find himself practically the victim of the Chancellor of the Exchequer, and, in taking away this money, the right hon. Gentleman is making it clear that there is going to be no alteration whatever in the policy of the Government in relation to large-scale public works to meet unemployment in this country.
The statement from the Chancellor of the Exchequer is all the more remarkable in face of the report, which was issued only yesterday and to which considerable attention has been drawn in the Press, of the Secretary of the International Labour Office on the question of public works. The "Times" gives to that report a whole column in this morning's news. Yesterday, of course, we received some good news of the unemployment figures, but will the House be surprised when I tell them that, although it was explained with great éclat in yesterday morning's papers—and no one was more pleased than myself at the news—that there was actually a reduction of 37,000 in unemployment in the Northern Division, there are still 450,000 people unemployed in that area and 200,000 in the Welsh Division. In three divisions out of the eight there are over a million unemployed, and the Government's policy plainly is that there is no hope whatever of large-scale public works to meet that particular problem. I want to protest against the speech which, with all the respect the House has, and I have myself, for the right hon. Gentleman, manifested a smugness that is criminal in view of the facts as they are. There is growing up in this House, and I have watched it day by day, a spirit of smug satisfaction which to those who know the facts in these particular areas seems not merely criminal but a total ignoring of the manhood and womanhood of this nation.

5.11 p.m.

Mr. GROVES: I would like to put a few points to the Chancellor of the Exchequer, arising especially from the statement that if there be any new commitments provision might be given to the Ministry of Transport. What concerns me, and I want to support the remarks made by the hon. Member for Plaistow (Mr. Thorne) is that in 1929 our borough received sanction for three big scheme. I will not weary the House with details, but the three together approximated to £1,110,000. When the so-called crisis of 1931 arrived these schemes were stopped. Because one of the schemes was an approach to the Lea, a certain portion of the road scheme in High Street, Stratford, was inevitable, and it may be said to the credit of the Department of the present Government that they could see it would be foolish to allow things to be delayed any longer. Therefore, we considered a scheme which approximated to £70,000 and constructed a very good bridge there.
I would like the Chancellor of the Exchequer to state exactly what will happen to schemes like the one I am talking about, where we previously received Government sanction to proceed, where all the plans have been prepared and approved by the engineering staff of the Ministry of Transport, where we have had Bills through this House and complete and full Parliamentary sanction has been given for the progress of the work, and where the only reason that the work is not being proceeded with is financial. If there was a surplus of £4,470,000 in the coffers of the Ministry of Transport, will the Chancellor of the Exchequer tell me why that precise scheme was not proceeded with? I do not want any bickering about it. I am pleading for my own area from the point of view of expediency, if you will, and not of principle. We are all very concerned if this highway is left uncompleted. If you want to get to Cambridge or Norwich or the eastern counties, you have to pass through this area. This is not a new commitment or a new scheme. May I repeat that it is a big scheme in three separate sections, but we have received full Parliamentary sanction. The plans are all approved by the Minister of Transport. Two-thirds of the scheme have not been started, and we all assume
that the reason is financial. If there was money in the Road Fund—

Mr. CHAMBERLAIN: Local money or Exchequer money?

Mr. GROVES: Exchequer money. The scheme I am calling attention to is a scheme approved by Parliament. Part of the money came from the urban district council and part from a grant made by the Road Fund. We have been negotiating with the Ministry of Transport for the past two years. It is a vital scheme, because the roads there are a veritable death trap. Although we have constructed a very fine and wide bridge there is still this bottle-neck which increases the danger to life and limb—not in a side road, but on the high road leading from London to the eastern counties. I do not expect the Chancellor to give me a reply at the moment, because the matter will need some inquiry, but I shall keenly appreciate it if he will give consideration to what can be done immediately. I would remind him that it is not a new commitment, but one which was upon the stocks long before the Government came in, and received the sanction of this House. I may explain that we have not proceeded with the further portion of the scheme because of the cost of acquiring property. Where we have had the opportunity to get on with the scheme without acquiring private property, we have had permission from the Ministry of Transport to do so. The scheme cannot stay as it is. The highest officials of the Ministry of Transport have visited our area and agree that things cannot remain as they are. Although I do not wish to use any harsh terms, I say there was no justification for taking this money from the Road Fund at a time when there was this pressing, almost imperative, need to complete a scheme which had been approved by this House.
I have put various questions to the Minister of Transport about the vital necessity of completing the widening of roads at Epping. Epping itself has a nice wide road, but the road from Chingford to Epping transgresses all the rules which have been laid down by the Ministry of Transport and any one who knows it will agree that there are not only bottle-necks, but that it twists and winds and is a death-trap to ordinary people as well as
to motorists. Three weeks ago I put a question about the arterial road to Southend. Only a part of that road has a double carriageway. It has been proved that a double carriageway is a contributory factor to safety on a road, and to leave two-thirds of the road without a double carriageway is very wrong at a time when the Chancellor is taking £4,000,000 out of the Road Fund, because, whatever he may say to the House, his action in taking that money will create the impression that things stand very well with the roads and that the money is not required for them. Then there is the lower, or old, road to Southend. I do not suppose the Chancellor goes that way himself, but it is just as well that he should know the state of affairs. On that old road there are places which are veritable death-traps, and the money which has been taken from the Road Fund ought to have been used for the purpose for which it was contributed, and that is to improve such roads. The Chancellor may say what he likes, but he will never convince the millions of motorists that the heavy taxation which they pay was not imposed upon them to raise money for the general maintenance of the roads.
I am pleased to hear of the letter which the local authorities have received asking for a five-year plan. I am not going to be drawn into the controversy as to the present position of the Road Fund being the result of the extravagance in 1931, because that is denied by influential and learned people in this country—the editor of the "Daily Express," and the Foreign Secretary. The Foreign Secretary made it perfectly clear in a speech that in his opinion the crisis of 1931 was not due to the activities of the Labour Government but to world economic causes. I do not want to use the name of a member of the other House, Lord Snowden, in any disrespectful sense, but it is clearly his opinion to-day—certainly it is to-day—that the crisis of 1931 was not due to the work of the Labour Government but arose entirely from world economic causes. If the local authorities respond to the call of the Ministry of Transport with the same vim with which they responded to the call of the Labour Government it looks to me as though the Chancellor of the Exchequer will be more extravagant than were the Labour Government in 1931.
But if he is responsible for—I will not say extravagance—for providing money to be spent on making the roads good and safe, I can assure him that he will not get the same adverse reflections from this side of the House as we received from his party when we were in power. I have put before him the question of widening High Street, Stratford, which is a matter of vital importance, and he will earn my gratitude if he will deal with it.

5.24 p.m.

Mr. PIKE: Hon. Members opposite have spoken of borrowing money which one cannot pay back and have accused the Chancellor of the Exchequer of expropriation of money belonging to the Road Fund. I would remind them that in 1931 Mr. Philip Snowden, as he then was, said:
The adoption of borrowing as an expedient to bridge a temporary deficiency in a fund when there is a prospect that it can be repaid is perfectly justified.
In my humble opinion the Chancellor of the Exchequer made it perfectly clear in his Budget speech that the taking of this money was perfectly justifiable on more grounds than one, and in view of the remarks of the hon. Member for Chester-le-Street (Mr. Lawson) upon unemployment in the North of England, perhaps I may quote the exact words of the Chancellor. Referring to his estimated surplus he said:
There is, therefore, no need for the purposes of the Road Fund, of this £4,470,000, but, on the other hand, it has occurred to me that there is a very pressing need for it elsewhere, as an addition to my modest surplus to be used for the relief of taxation."—[OFFICIAL REPORT, 15th April, 1935; cols. 1630–31, Vol. 300.]
I submit that in so far as the relief of taxation under the present Budget will create employment and a greater demand for labour the action of the Chancellor should appeal to the hon. Member for Chester-le-Street, because if the burden of taxation which existed between 1929 and 1930 had continued he would not have had cause to grumble about 450,000 people being unemployed in the North but have been faced with the spectacle of 2,500,000 unemployed. It is by measures for the relief of taxation, no matter how small or how large they may be, that we can hope to get the greatest number of people back into useful employment. But hon. Members opposite
have not gone to the full extent in the criticisms which were open to them. Why did they not say that they were not in favour of the reduction of the entertainments' duty on the cheaper seats? Why did they not say they would prefer that this £4,470,000 had not been made use of for the general benefits which have been bestowed on the poorer Income Tax payers? The hon. Member for Plaistow (Mr. Thorne) interrupts me to say that he suggested that money should be raised in some other way. He applauds his friends when they talk of the confiscatory methods of the Chancellor of the Exchequer, but is quite ready to confiscate a lot more from the estates of people when they pass from this world to another. He does not mind confiscating the property of dead people. I wonder what he thinks of the confiscation of certain funds by certain trade unions to be used for certain purposes not specifically associated with the direct work of trade unions. We never hear from the opposite side of the House any reference to that form of confiscation. Though as a motorist I might perhaps have a grouse at money being taken from the Road Fund, I am convinced that the use of that money in ways which will create more trade and industry will ultimately do more to increase the possibility of carrying through road schemes for the benefit of motorists than would otherwise have been the case. The Chancellor has given us an assurance that should the Minister of Transport require specific sums which he cannot obtain from the Road Fund such applications will have first claim upon his consideration, and I am satisfied that the Chancellor will honestly fulfil that promise. But there is a limit to be put on the demands of the Minister of Transport. If we are to believe the newspapers, the Ministry of Transport is the acme of schemers, and if the Chancellor of the Exchequer were compelled to give a definite pledge he might find himself committed to financing thousands of schemes which were not regarded as necessary even by motorists.

I should say, however, that if the Minister of Transport does come to him for financial assistance for some scheme which cannot be put into operation because the finances of the local authorities concerned cannot stand the strain such an application will receive every consideration.

Many things to-day are calling the attention of the public to the danger of the roads. Many critics of the present road safety measures of the Minister of Transport know that there are schemes that could be put into operation to make for greater safety than those which have already been applied, but that local and national financial circumstances are holding back such schemes. I hope that, if financial circumstances permit, the Chancellor of the Exchequer will not turn a deaf ear to the Minister of Transport if that Minister should come for money in order to promote such schemes.

The only other thing I wish to do is to repudiate what the Opposition has termed the utterly dishonest and repeated diversion of funds which were created to be used for the benefit of the persons who paid into them. If the Opposition, when they were in power, had carried through their schemes in the manner in which they are demanding that the present Chancellor of the Exchequer should carry through his financial schemes, possibly we should be on that side instead of on this, but when they attempt unjustifiably to tar the Chancellor of the Exchequer with their own brush we are entitled to point out that, whereas the Chancellor of the Exchequer has opened up the road to prosperity, their financial schemes created the road to poverty, and that even with the taking of the £4,470,000 there is no fear of England going bankrupt so long as the Chancellor of the Exchequer is allowed to retain his present position for a period of years

Question put, "That the words 'four million' stand part of the Resolution."

The Committee divided: Ayes, 213; Noes, 57.

Division No. 160.]
AYES.
[5.33 p.m.


Acland-Troyte, Lieut.-Colonel
Allen, William (stoke-on-Trent)
Balfour, Capt. Harold (I. of Thanet)


Adams, Samuel Vyvyan T. (Leeds, W.)
Applin, Lieut.-Col. Reginald V. K.
Barclay-Harvey, C. M.


Albery, Irving James
Assheton, Ralph
Bernays, Robert


Allen, Sir J. Sandeman (Liverp'l, W.)
Astor, Maj. Hn. John J. (Kent, Dover)
Birchall, Major Sir John Dearman


Allen, Lt.-Col. J. Sandeman (B'k'nh'd)
Baldwin, Rt. Hon. Stanley
Blindell, James


Bossom, A. C.
Headlam, Lieut.-Col. Cuthbert M.
Peto, Geoffrey K. (W'verh'pt'n, Bilston)


Boulton, W. W.
Heneage, Lieut.-Colonel Arthur P.
Pickthorn, K. W. M.


Bower, Commander Robert Tatton
Herbert, Major J. A. (Monmouth)
Pike, Cecil F.


Braithwaite, J. G. (Hillsborough)
Hills, Major Rt. Hon. John Waller
Potter, John


Brass, Captain Sir William
Hope, Capt. Hon. A. O. J. (Aston)
Procter, Major Henry Adam


Broadbent, Colonel John
Hudson, Capt. A. U. M. (Hackney, N.)
Ramsay, T. B. W. (Western Islet)


Brocklebank, C. E. R.
Hudson, Robert Spear (Southport)
Ramsbotham, Herwald


Browne, Captain A. C.
Hume, Sir George Hopwood
Ramsden, Sir Eugene


Buchan-Hepburn, P. G. T.
Hunter, Dr. Joseph (Dumfries)
Rankin, Robert


Burgin, Dr. Edward Leslie
Hurst, Sir Gerald B.
Reed, Arthur C. (Exeter)


Burton, Colonel Henry Walter
Inskip, Rt. Hon. Sir Thomas W. H.
Reid, Capt. A. Cunningham-


Cadogan, Hon. Edward
Jackson, Sir Henry (Wandsworth, C.)
Reid, David D. (County Down)


Campbell, Sir Edward Taswell (Brmly)
Jamieson, Douglas
Reid, James S. C. (Stirling)


Carver, Major William H.
Jones, Lewis (Swansea, West)
Reid, William Allan (Derby)


Cautley, Sir Henry S.
Ker, J. Campbell
Rickards, George William


Cayzer, Sir Charles (Chester, City)
Kerr, Hamilton W.
Ropner, Colonel L.


Cazalet, Thelma (Islington, E.)
Knox, Sir Alfred
Rosbotham, Sir Thomas


Chamberlain, Rt. Hon. N. (Edgbaston)
Lamb, Sir Joseph Quinton
Ross, Ronald D.


Christie, James Archibald
Lambert, Rt. Hon. George
Ross Taylor, Walter (Woodbridge)


Cobb, Sir Cyril
Law, Sir Alfred
Ruggles-Brise, Colonel Sir Edward


Colfox, Major William Philip
Law, Richard K. (Hull, S. W.)
Runge, Norah Cecil


Collins, Rt. Hon. Sir Godfrey
Leckle, J. A.
Russell, Albert (Kirkcaldy)


Colville, Lieut.-Colonel J.
Leech, Dr. J. W.
Russell, Alexander West (Tynemouth)


Conant, R. J. E.
Leighton, Major B. E. P.
Russell, R. J. (Eddisbury)


Cook, Thomas A.
Liddall, Walter S.
Rutherford, Sir John Hugo (Liverp'l)


Cooke, Douglas
Little, Graham-, Sir Ernest
Salmon, Sir Isidore


Cooper, A. Duff
Llewellin, Major John J.
Samuel, M. R. A. (W'ds'wth, Putney).


Cranborne, Viscount
Lloyd, Geoffrey
Sanderson, Sir Frank Barnard


Croft, Brigadier-General Sir H.
Loder, Captain J. de Vera
Savery, Samuel Servington


Crookshank, Col. C. de Windt (Bootle)
Loftus, Pierce C.
Shaw, Captain William T. (Forfar)


Cruddas, Lieut.-Colonel Bernard
Lovat-Fraser, James Alexander
Shepperson, Sir Ernest W.


Culverwell, Cyril Tom
Lumley, Captain Lawrence R.
Smiles, Lieut.-Col. Sir Walter D.


Davies, Maj. Geo. F. (Somerset, Yeovil)
Mabane, William
Smith, Louis W. (Sheffield, Hallam)


Davison, Sir William Henry
MacAndrew, Lieut.-Col. C. G. (Partick)
Smith, Sir Robert (Ab'd'n & K'dine, C.)


Denman, Hon. R. D.
MacAndrew, Capt. J. O. (Ayr)
Somerville, Annesley A. (Windsor)


Denville, Alfred
McCorquodale, M. S.
Sotheron-Estcourt, Captain T. E.


Doran, Edward
Macdonald, Capt. P. D. (I. of W.)
Southby, Commander Archibald R. J.


Drewe, Cedric
McKie, John Hamilton
Spears, Brigadier-General Edward L.


Duckworth, George A. V.
Maclay, Hon. Joseph Paton
Spencer, Captain Richard A.


Dugdale, Captain Thomas Lionel
Makins, Brigadier-General Ernest
Spender-Clay, Rt. Hon. Herbert H.


Duggan, Hubert John
Manningham-Buller, Lt.-Col. Sir M.
Spens, William Patrick


Duncan, James A. L. (Kensington, N.)
Margesson, Capt. Rt. Hon. H. D. R.
Stanley, Rt. Hon. Oliver (W'morland)


Eales, John Frederick
Marsden, Commander Arthur
Stevenson, James


Ellis, Sir R. Geoffrey
Martin, Thomas B.
Storey, Samuel


Elmley, Viscount
Mayhew, Lieut.-Colonel John
Strauss, Edward A.


Emmott, Charles E. G. C.
Meller, Sir Richard James
Sugden, Sir Wilfrid Hart


Fermoy, Lord
Mills, Sir Frederick (Leyton, E.)
Sutcliffe, Harold


Fielden, Edward Brocklehurst
Mills, Major J. D. (New Forest)
Taylor, Vice-Admiral E. A. (P'dd'gt'n, S.)


Fremantle, Sir Francis
Milne, Charles
Thomas, Rt. Hon. J. H. (Derby)


Ganzoni, Sir John
Molson, A. Hugh Elsdale
Thompson, Sir Luke


Gillett, Sir George Masterman
Monsell, Rt. Hon. Sir B. Eyres
Touche, Gordon Cosmo


Gilmour, Lt.-Col. Rt. Hon. Sir John
Morgan, Robert H.
Train, John


Gledhill, Gilbert
Morrison, G. A. (Scottish Univer'ties)
Tryon, Rt. Hon. George Clement


Gluckstein, Louis Halle
Morrison, William Shepherd
Turton, Robert Hugh


Goodman, Colonel Albert W.
Munro, Patrick
Ward, Lt.-Col. Sir A. L. (Hull)


Graham, Sir F. Fergus (C'mb'rl'd, N.)
Nation, Brigadier-General J. J. H.
Ward, Irene Mary Bewick (Wallsend)


Graves, Marjorie
Nicholson, Godfrey (Morpeth)
Warrender, Sir Victor A. G.


Gretton, Colonel Rt. Hon. John
North, Edward T.
Williams, Charles (Devon, Torquay)


Guest, Capt. Rt. Hon. F. E.
Nunn, William
Wills, Wilfrid D.


Guinness, Thomas L. E. B.
Orr Ewing, I. L.
Wilson, Clyde T. (West Toxteth)


Gunston, Captain D. W.
Pearson, William G.
Windsor-Clive, Lieut.-Colonel George


Hamilton Sir George (Ilford)
Peat, Charles U.
Womersley, Sir Walter


Hannon, Patrick Joseph Henry
Penny, Sir George
Wood, Rt. Hon. Sir H. Kingsley


Harbord, Arthur
Percy, Lord Eustace
Young, Rt. Hon. Sir Hilton (S'v'noaks)


Hartington, Marquess of
Perkins, Walter R. D.



Harvey, Major Sir Samuel (Totnes)
Petherick, M.
TELLERS FOR THE AYES.—


Haslam, Henry (Horncastle)
Peto, Sir Basil E. (Devon, Barnstaple)
Captain Sir George Bowyer and




Dr. Morris-Jones.


NOES.


Adams, D. M. (Poplar, South)
Foot, Isaac (Cornwall, Bodmin)
Lawson, John James


Addison, Rt. Hon. Dr. Christopher
Gardner, Benjamin Walter
Leonard, William


Attlee, Clement Richard
George, Major G. Lloyd (Pembroke)
Logan, David Gilbert


Banfield, John William
Greenwood, Rt. Hon. Arthur
Lunn, William


Batey, Joseph
Grenfell, David Rees (Glamorgan)
Macdonald, Gordon (Ince)


Bevan, Aneurin (Ebbw Vale)
Griffith, F. Kingsley (Middlesbro, W.)
Macdonald, Sir Murdoch (Inverness)


Brown, C. W. E. (Notts., Mansfield)
Griffiths, George A. (Yorks, W. Riding)
McEntee, Valentine L.


Buchanan, George
Griffiths, T. (Monmouth, Pontypool)
McKeag, William


Cocks, Frederick Seymour
Grundy, Thomas W.
Macquisten, Frederick Alexander


Daggar, George
Hall, George H. (Merthyr Tydvil)
Mander, Geoffrey le M.


Davies, David L. (Pontypridd)
Hamilton, Sir R. W. (Orkney & Ztl'nd)
Parkinson, John Allen


Davies, Rhys John (Westhoughton)
Harris, Sir Percy
Pickering, Ernest H.


Edwards, Charles
Holdsworth, Herbert
Rea, Walter Russell


Evans, David Owen (Cardigan)
Johnstone, Harcourt (S. Shields)
Roberts, Aled (Wrexham)


Foot, Dingle (Dundee)
Jones, Morgan (Caerphilly)
Salter, Dr. Alfred




Samuel, Rt. Hon. Sir H. (Darwen)
West, F. R.
Williams, Thomas (York, Don Valley)


Smith, Tom (Normanton)
White, Henry Graham
Wood, Sir Murdoch McKenzie (Banff)


Strickland, Captain W. F.
Williams, David (Swansea, East)



Thorne, William James
Williams, Edward John (Ogmore)
TELLERS FOR THE NOES.—


Wedgwood, Rt. Hon. Josiah
Williams, Dr. John H. (Llanelly)
Mr. Tinker and Mr. Groves.

Motion made, and Question put, "That this House doth agree with the Committee in the said Resolution."

The Committee divided: Ayes, 206; Noes, 53.

Division No. 161.]
AYES.
[5.43 p.m.


Acland-Troyte, Lieut.-Colonel
Gretton, Colonel Rt. Hon. John
Penny, Sir George


Adams, Samuel Vyvyan T. (Leeds, W.)
Hacking, Rt. Hon. Douglas H.
Percy, Lord Eustace


Albery, Irving James
Hamilton, Sir George (Ilford)
Perkins, Walter R. D.


Allen, Sir J. Sandeman (Liverp'l, W.)
Hannon, Patrick Joseph Henry
Petherick, M.


Allen, Lt.-Col. J. Sandeman (B'k'nh'd)
Harbord, Arthur
Peto, Geoffrey K. (W'verh'pt'n, Bilston)


Allen, William (Stoke-on-Trent)
Hartington, Marquees of
Pickthorn, K. W. M.


Applin, Lieut.-Col. Reginald V. K.
Haslam, Henry (Horncastle)
Potter, John


Apsley, Lord
Headlam, Lieut.-Col. Cuthbert M.
Procter, Major Henry Adam


Assheton, Ralph
Heneage, Lieut.-Colonel Arthur P.
Ramsay, T. B. W. (Western Isles)


Astbury, Lieut.-Com. Frederick Wolfe
Herbert, Major J. A. (Monmouth)
Ramsbotham, Herwald


Baldwin, Rt. Hon. Stanley
Hills, Major Rt. Hon. John waller
Ramsden, Sir Eugene


Barclay-Harvey, C. M.
Hope, Capt. Hon. A. O. J. (Aston)
Rankin, Robert


Bernays, Robert
Horne, Rt. Hon. Sir Robert S.
Reed, Arthur C. (Exeter)


Birchall, Major Sir John Dearman
Hudson, Capt. A. U. M. (Hackney, N.)
Reid, Capt. A. Cunningham.


Blindell, James
Hudson, Robert Spear (Southport)
Reid, David D. (County Down)


Bossom, A. C.
Hume, Sir George Hopwood
Reid, James S. C. (Stirling)


Bower, Commander Robert Tatton
Hunter, Dr. Joseph (Dumfries)
Reid, William Allan (Derby)


Braithwaite, J. G. (Hillsborough)
Hurst, Sir Gerald B.
Rickards, George William


Brass, Captain Sir William
Inskip, Rt. Hon. Sir Thomas W. H.
Rosbotham, Sir Thomas


Broadbent, Colonel John
Jackson, Sir Henry (Wandsworth, C.)
Ross, Ronald D.


Brocklebank, C. E. R.
Jamieson, Douglas
Ross Taylor, Walter (Woodbridge)


Browne, Captain A. C.
Jones, Lewis (Swansea, West)
Ruggles-Brise, Colonel Sir Edward


Buchan-Hepburn, P. G. T.
Ker, J. Campbell
Runge, Norah Cecil


Burgin, Dr. Edward Leslie
Kerr, Hamilton W.
Russell, Albert (Kirkcaldy)


Burton, Colonel Henry Walter
Lamb, Sir Joseph Quinton
Russell, Alexander West (Tynemouth)


Cadogan, Hon. Edward
Lambert, Rt. Hon. George
Russell, R. J. (Eddisbury)


Campbell, Sir Edward Taswell (Brmly)
Law, Sir Alfred
Rutherford, Sir John Hugo (Liverp'l)


Carver, Major William H.
Law, Richard K. (Hull, S. W.)
Samuel, M. R. A. (W'ds'wth, Putney)


Cautley, Sir Henry S.
Leckle, J. A.
Sanderson, Sir Frank Barnard


Cayzer, Sir Charles (Chester, City)
Leech, Dr. J. W.
Savery, Samuel Servington


Cazalet, Thelma (Islington, E.)
Leighton, Major B. E. P.
Shakespeare, Geoffrey.


Chamberlain, Rt. Hon. N. (Edgbaston)
Little, Graham-, Sir Ernest
Shaw, Captain William T. (Forfar)


Christie, James Archibald
Llewellin, Major John J.
Shepperson, Sir Ernest W.


Clarry, Reginald George
Lloyd, Geoffrey
Smiles, Lieut.-Col. Sir Walter D.


Cobb, Sir Cyril
Loder, Captain J. de Vere
Smith, Louis W. (Sheffield, Hallam)


Colfox, Major William Philip
Loftus, Pierce C.
Smith, Sir Robert (Ab'd'n & K'dine, C.)


Collins, Rt. Hon. Sir Godfrey
Lovat-Fraser, James Alexander
Somerville, Annesley A. (Windsor)


Colville, Lieut.-Colonel J.
Lumley, Captain Lawrence R.
Sotheron-Estcourt, Captain T. E.


Conant, R. J. E.
Mabane, William
Southby, Commander Archibald R. J.


Cook, Thomas A.
MacAndrew, Lieut.-Col. C. G. (Partick)
Spears, Brigadier-General Edward L.


Cooke, Douglas
MacAndrew, Capt. J. O. (Ayr)
Spencer, Captain Richard A.


Cooper, A. Duff
McCorquodale, M. S.
Spender-Clay, Rt. Hon. Herbert H.


Courthope, Colonel Sir George L.
Macdonald, Capt. P. D. (I. of W.)
Spens, William Patrick


Cranborne, Viscount
McKie, John Hamilton
Stanley Rt. Hon. Oliver (W'morland)


Crookshank, Col. C. de Windt (Bootle)
Maclay, Hon. Joseph Paton
Stevenson, James


Cruddas, Lieut.-Colonel Bernard
Macmillan, Maurice Harold
Storey, Samuel


Culverwell, Cyril Tom
Makins, Brigadier-General Ernest
Stourton, Hon. John J.


Davies, Maj. Geo. F. (Somerset, Yeovil)
Manningham-Buller, Lt.-Col. Sir M.
Sugden, Sir Wilfrid Hart


Davison, Sir William Henry
Margesson, Capt. Rt. Hon. H. D. R.
Taylor, Vice-Admiral E. A. (P'dd'gt'n, S.)


Denman, Hon. R. D.
Marsden, Commander Arthur
Thomas, Rt. Hon. J. H. (Derby)


Denville, Alfred
Martin, Thomas B.
Thompson, Sir Luke


Doran, Edward
Mayhew, Lieut.-Colonel John
Touche, Gordon Cosmo


Duckworth, George A. V.
Meller, Sir Richard James
Train, John


Dugdale, Captain Thomas Lionel
Mills, Sir Frederick (Leyton, E.)
Tryon, Rt. Hon. George Clement


Duggan, Hubert John
Mills, Major J. D. (New Forest)
Turton, Robert Hugh


Duncan, James A. L. (Kensington, N.)
Milne, Charles
Ward, Lt.-Col. Sir A. L. (Hull)


Eales, John Frederick
Molson, A. Hugh Elsdale
Ward, Irene Mary Bewick (Wallsend)


Ellis, Sir R. Geoffrey
Monsell, Rt. Hon. Sir B. Eyres
Warrender, Sir Victor A. G.


Elmley, Viscount
Mcore, Lt.-Col. Thomas C. R. (Ayr)
Wedderburn, Henry James Scrymgeour-


Emmott, Charles E. G. C.
Morgan, Robert H.
Williams, Charles (Devon, Torquay)


Fermoy, Lord
Morrison, G. A. (Scottish Univer'ties)
Williams, Herbert G. (Croydon, S.)


Fielden, Edward Brocklehurst
Morrison, William Shephard
Wills, Wilfrid D.


Fremantle, Sir Francis
Munro, Patrick
Wilson, Clyde T. (West Toxteth)


Ganzoni, Sir John
Nation, Brigadier-General J. J. H.
Windsor-Clive, Lieut.-Colonel George


Gillett, Sir George Masterman
Nicholson, Godfrey (Morpeth)
Womersley, Sir Walter


Gilmour, Lt.-Col. Rt. Hon. Sir John
North, Edward T.
Wood, Rt. Hon. Sir H. Kingsley


Gledhill, Gilbert
Nunn, William
Young, Rt. Hon. Sir Hilton (S'v'noaks)


Goodman, Colonel Albert W.
Orr Ewing, I. L.



Graham, Sir F. Fergus (C'mb'rl'd, N.)
Pearson, William G.
TELLERS FOR THE AYES.—


Graves, Marjorie
Peat, Charles U.
Captain Sir George Bowyer and




Dr. Morris-Jones.


NOES.


Adams, D. M. (Popular, South)
Grenfell, David Rees (Glamorgan)
Parkinson, John Allen


Addison, Rt. Hon. Dr. Christopher
Griffith, F. Kingsley (Middlesbro', W.)
Pickering, Ernest H.


Attlee, Clement Richard
Griffiths, George A. (Yorks, W. Riding)
Rea, Walter Russell


Banfield, John William
Griffiths, T. (Monmouth, Pontypool)
Salter, Dr. Alfred


Batey, Joseph
Grundy, Thomas W.
Samuel, Rt. Hon Sir H. (Darwen)


Bevan, Aneurin (Ebbw Vale)
Hall, George H. (Merthyr Tydvil)
Smith, Tom (Normanton)


Brown, C. W. E. (Notts., Mansfield)
Hamilton, Sir R. W. (Orkney & Zetl'nd)
Thorne, William James


Buchanan, George
Harris, Sir Percy
Wedgwood, Rt. Hon. Josiah


Cocks, Frederick Seymour
Holdsworth, Herbert
West, F. R.


Daggar, George
Johnstone, Harcourt (S. Shields)
White, Henry Graham


Davies, David L. (Pontypridd)
Jones, Morgan (Caerphilly)
Williams, David (Swansea, East)


Davies, Rhys John (Westhoughton)
Lawson, John James
Williams, Edward John (Ogmore)


Edwards, Charles
Leonard, William
Williams, Dr. John H. (Llanelly)


Evans, David Owen (Cardigan)
Logan, David Gilbert
Williams, Thomas (York, Don Valley)


Foot, Dingle (Dundee)
Lunn, William
Wood, Sir Murdoch McKenzie (Banff)


Foot, Isaac (Cornwall, Bodmin)
Macdonald, Gordon (Ince)



Gardner, Benjamin Walter
Macdonald, Sir Murdoch (Inverness)
TELLERS FOR THE NOES.—


George, Major G. Lloyd (Pembroke)
McEntee, Valentine L.
Mr. Tinker and Mr. Groves.


Greenwood, Rt. Hon. Arthur
McKeag, William



Fifth Resolution read a Second time.

Orders of the Day — FINANCE [LOCAL LOANS].

Resolution reported:
That it is expedient to make provision for the creation of other securities in lieu of Local Loans stock, for the redemption and conversion of Local Loans stock and securities issued in pursuance of this Resolution, and for matters relating thereto, and in particular to authorize—

(1) the creation and issue by the Treasury of such securities bearing such rate of interest and subject to such conditions as to redemption, repayment, or otherwise as they think fit for any of the following purposes:

(a) for the purposes for which Local Loans stock may be created;
(b) for raising money for the redemption of any such stock or securities;
(c) for the purpose of exchange with any such stock or securities, and for raising money if required as further consideration for any such exchange;
(d) for raising money for the repayment to the Exchequer of sums issued out of the Consolidated Fund under the next following paragraph;

(2) the issue out of the Consolidated Fund—

(a) of any sums required to be paid in respect of the interest or the expenses of issue or management of any such securities, in so far as they cannot be paid out of the income account of the Local Loans Fund; and
(b) of any sums required to be paid in respect of the principal of any such securities, or in respect of the redemption of Local Loans stock, in so far as they cannot be paid out of the capital account of the Local Loans Fund;

and the repayment out of the Local Loans Fund to the Exchequer of any sums so issued;

(3) the raising of money by the Treasury under Section one of the War Loan Act, 1919, for the purpose of providing for the issue out of the Consolidated
Fund of sums mentioned in subparagraph (b) of the last foregoing paragraph, and the advance by the Bank of England to the Treasury of any money which the Treasury are so authorised to raise;

(4) the giving of relief, at any time after Local Loans stock has been redeemed or exchanged in pursuance of this Resolution, from outstanding obligations to the Local Loans Fund either in respect of interest or in respect of capital, so, however, that no such relief shall be given unless the assets of the fund exceed in value its liabilities by an amount not less than ten million pounds, or so as to reduce the said excess to less than five million pounds;

(5) the application to securities issued in pursuance of paragraph (1) of this Resolution of any enactment relating to Local Loans stock."

Motion made, and Question proposed, "That this House cloth agree with the Committee in the said Resolution.

5.50 p.m.

Mr. ANEURIN BEVAN: It would almost certainly have been more convenient, having regard to the technical nature of this Resolution, if the Chancellor of the Exchequer had made a preliminary explanation. The explanation contained in his Budget speech was clear but limited, and I thought that perhaps, if we had an explanation of the extent of the change intended, it would facilitate what I think will be in any case a short discussion.

Mr. CHAMBERLAIN: Perhaps the hon. Member will indicate the points on which he would like further information.

Mr. BEVAN: MY justification for raising the matter at all is contained in paragraph (4) of the Resolution:
The giving of relief, at any time after Local Loans stock has been redeemed or
exchanged in pursuance of this Resolution, from outstanding obligations to the Local Loans Fund either in respect of interest or in respect of capital, so, however, that no such relief shall be given unless the assets of the fund exceed in value its liabilities by an amount not less than ten million pounds, or so as to reduce the said excess to less than five million pounds.
I do not know whether my anticipations are too optimistic, or whether I am placing a wrong interpretation upon that language, but I assume that it means that the Chancellor is taking powers to convert this Local Loans stock, and that, as a consequence of the new situation that will be created, there may be a fund at the disposal of the Local Loans Board out of which it may be possible to relieve local authorities who are suffering at the moment from excessive interest charges, or, indeed, to reduce their capital commitments.
The situation of the local authorities, particularly in the distressed areas in this country, is exceedingly difficult. In South Wales alone there is some £40,000,000 of public debt. A very large proportion of this debt was incurred at the instance of the Government. Some of it was incurred before the War, but a very large proportion of it was incurred at the end of the War and in the post-war boom period. At that time interest rates were exceedingly high, and from 1920 up to as recently as 1930 the Local Loans Board demanded rates of interest varying from 4¾ per cent. to 6½ per cent. A very large amount of the local loans was obtained at 6½ per cent., although, of course, all the time the Local Loans Board was obtaining money at 3 per cent. I am not going to emphasise that difference, because I know that it is rather unreal. The Local Loans Board, or rather, the Treasury, raised Local Loans stock in the open market at 50, 60 and 70. That was redeemable at one month's notice, and consequently the interest was low, because the stock was redeemable at par, but, owing to the low rate of interest, it had to be offered sometimes at 50, and 60 and 70.
The local authorities have approached the Local Loans Board on several occasions asking for relief from their burdens, but the Commissioners pointed out that they were unable to relieve the local authorities because of their own commitments. A great deal of this money was
borrowed for 30, 40, 50 and 60 years. I think the original limit for any loan was 50 years, but a portion of the housing loans under the Wheatley Act extend as far as 60 years. The local authorities have borrowed this money at anything from 5 to 6½ per cent., and have to carry that high interest over the whole period of the loan, although interest rates are now, of course, down at 3 and sometimes 2½ per cent. It seems to me that, if these loans were embarked upon at the instance of the Government, there is a case for asking the Government to come to the assistance of the local authorities. At the present time they are caught between the scissors of declining prices and the high value of money. The cost of living has fallen in the years between the borrowing of this money and the present time, and the burden of the loans has very gravely increased.
That is true, of course, of rentier burdens as a whole, and is true of the whole £429,000,000 of Local Loans stock. But I am not pleading the case of the local authorities as a whole at the present time; I am pleading the case of the local authorities in the distressed areas in particular, because not only have they to bear this increased burden of dearer money, but they have to bear it on declining resources. In South Wales the rate poundages vary from 20s. to as much as 27s. 6d. in the pound; rates are 200 per cent. more than they were before the War; and there are some urban authorities with as many as 80 per cent. of their adult insurable population unemployed. I know that these facts are well known to the Chancellor of the Exchequer, but the trouble is that, although the resources out of which these local authorities have to meet their demands are declining, the burden is, not only relatively, but absolutely, increasing. If you merely had declining resources and the burden remained fixed, it would be had enough, but to have a burden which is increasing in weight owing to dearer money, and at the same time to have declining resources, is an absolutely intolerable situation. It is very largely as a consequence of this situation that the local authorities in the distressed areas find themselves utterly unable to embark upon any capital expenditure at the present time, with the result that their distress is aggravated.
Some local authorities can go into the open market and borrow at lower rates of interest than are charged by the Local Loans Board. In one case quite recently a local authority raised a large sum of money in the open market at less than 3½ per cent. I am not claiming that the rate of interest charged by the Local Loans Board now is too high; the Board in September, 1934, charged a minimum, I think, of 3½ per cent. for local loans, and in October this was further reduced to 3¾ per cent., so that the Local Loans Board is now, with regard to current loans, obviously doing its duty. It is raising money at 3 per cent. and lending it at 3¼ 3½ or 3¾ per cent., and I have no complaint at all to make against it. My case is not an indictment of the Local Loans Board at all.
My case is a plea that, if the Chancellor of the Exchequer can possibly do so, he should bring forward the relief which, I think, he intends to grant under paragraph (4) of this Resolution. The local authorities in the distressed areas to-day are unable to borrow at these cheaper rates because they cannot borrow large sums of money at the present time, but can the House seriously contemplate that practically one-third of the area of this country shall go on for another 40 or 50 years paying anything from 5 to 6½ per cent. for this money? It is an intolerable situation. If the House insists that that should be done, I am afraid that very serious consequences will follow. There have already been rumblings in many quarters that the local authorities will be compelled to resort to some form of repudiation. I am not suggesting that at all as a threat, but the situation is becoming desperate. I know very well that the Chancellor of the Exchequer can say that local authorities cannot repudiate their debt to the Local Loans Board, because the Government have always the whip hand of the local authorities in respect of grants-in-aid, and can always take that money and meet the local authorities' action in that way. But I suggest to the right hon. Gentleman and to the House that there is surely something wrong with the distribution of the burden of local indebtedness which calls upon these areas, suffering so acutely from causes over which they have no control, to pay these excessively high rates of interest all the time.
I believe that I shall be representing the views of hon. Members in all quarters of the House, when I suggest to the Chancellor of the Exchequer that he should use all his ingenuity and the whole resources of the Treasury in order to secure some form of conversion that will enable the Local Loans Board to have at its disposal money by means of which it could give relief to designated local authorities. I admit I cannot at the moment, within the four corners of the commitments of the Treasury, suggest any way by which it can be done. I assume that the Chancellor of the Exchequer is expecting that the proposed redemption will result in something like £10,000,000 to £15,000,000 being at the disposal of the Local Loans Board at some future date. I do not blame him that he has not indicated, for obvious reasons, the time when conversion can take place, but I hope that he will expedite it, because the sooner conversion takes place, the sooner it may be that the Local Loans Board will have this capital sum at disposal. The Chancellor of the Exchequer stated in his speech that the Local Loans stock was redeemable at par. It means that the stockholders will get their pound of flesh all right because many of them paid, 55, 60 and 65 for the stock, and it will be redeemed at par. That is a very excellent thing for those who bought the stock at a time when money was very cheap. [An HON. MEMBER "Dear."] No, when money was cheap. When a great deal of this stock was bought, during the War and immediately after the War, money was plentiful, money was cheap. [Interruption.] I have always thought that when money is plentiful, it is cheap. At any rate, it does not really matter if from one aspect it was dear and from another aspect it was cheap, for it is clear that at that time they were able to purchase this stock, and they are now having it redeemed in terms of money with a much higher purchasing power than the money with which they bought it. That is the position. Stockholders are going to be put into a very strong position, but the poor devils who had to borrow this money from the Local Loans Board at the time, will keep on paying the high interest indefinitely.
There is something very wrong indeed with a system that enables rentiers to live in some of our pleasure cities and extract revenue week after week, month
after month and year after year from the stricken areas of Great Britain. It is a situation which, when it becomes known to the distressed areas in its full implication, will not be tolerated. Unemployed steel workers, colliers and cotton operatives are not going to continue to pay this high interest all the way in order to provide fat revenues for the more prosperous districts in Great Britain. I submit to the Chancellor of the Exchequer that the same logic which applies to the conversion of National Debt, applies even to a greater degree to local stock in the distressed areas. I am sure that he will earn the indebtedness of hon. Members in all parts of the House and bring very much needed relief to the distressed areas, if he is able to use paragraph (4) of this Financial Resolution as an instrument by means of which it may be possible for the distressed areas to have a reduction either of their capital indebtedness or of their loan charges.

6.8 p.m.

Mr. CHAMBERLAIN: The hon. Member indicated that he desired me to give some information on the subject of this Resolution which would enable him to understand better what the scope of the Resolution might be. After listening to the hon. Member, I see that he has not quite appreciated, I think, the limitations of the Resolution, and I presume that I should be out of Order in discussing the general question of the position of distressed areas and their need for relief on a Motion of this kind which is strictly concerned with the financial aspects of certain proposals in connection with the Local Loans Fund. The particular paragraph to which the hon. Member drew my attention—No. 4—as he rightly said, refers to the possible giving of relief, not necessarily to distressed areas, but to any areas in the future, from outstanding obligations to the Local Loans Fund, but I would call the attention of the hon. Member and of the House to the fact that this relief cannot be given at any time. It cannot be given now, for example. It can only be given, as stated in the Resolution itself, at any time after Local Loans stock has been redeemed or exchanged in pursuance of this Resolution. Therefore, there is nothing that can be done now to give relief, and I may say that the Fund, while it is at present solvent, has
no such resources as would enable it to make any concession or relief in the existing rates of interest.
This Clause refers to some time in the future, as the hon. Member said, after conversion or exchange has taken place in pursuance of the Resolution, when conceivably the situation may have so altered as to leave the Fund with resources of not less than £10,000,000. Some relief might be given then, as long as that relief was not so great as to reduce that excess to something under £5,000,000. The hon. Member said he hoped that I would do everything I could to anticipate that period. My reply to him is that it is not within my power to do anything which will hasten the moment at which conversion becomes possible except to ask the House to pass this Resolution, because without this Resolution we cannot take advantage of the conditions when they are favourable to conversion. Therefore, I am doing all that I can at the moment to carry out what the hon. Member has in view. Let us pass this Resolution. We shall then be in a position, if the situation should be such as to make conversion feasible, to take advantage of it, and that would be the first step towards the giving of any relief as contemplated by paragraph (4) of the Resolution.

6.11 p.m.

Major HILLS: I welcome paragraph (4), and I agree that it will certainly be a relief, but I am sure that the Chancellor of the Exchequer knows of the terrible position of many local authorities. I do not want to weary the House, but I desire to put before hon. Members, quite shortly, facts from my own knowledge. After the War a great many local authorities were strongly urged by the Government to build—they were almost compelled to build—and in order to build they had to borrow. At that time money was borrowed at 4½, 5 or even 6 per cent. for from 40 to 60 years. What has happened? Local authorities now find that they are bound for 30 or 40 years or more to pay 6 per cent. on money which they can now get in the market at 3 per cent. I quite agree that a man who loaned, say, £1,000 to the Public Works Loans Commissioners is entitled to his £60 a year for the full term of 60 years, and you cannot compulsorily
convert that man's holding by giving him £1,000 for it, for the stock will have changed hands, and instead of being worth £1,000 it is now worth about £2,000. It is, I agree, a deadlock. You cannot force the investor to sacrifice so heavy a loss; and it is a very heavy charge for the Treasury to bear. The reason for asking for some concession is that in 1920 and 1921 a great many of the local authorities—and not very rich ones—were almost compelled by the Government to spend a very large amount of money. It proved to be improvident finance. Now they have had to reduce their rents, and they cannot always get even those reduced rents. There are in some cases charges on the rates which are almost intolerable.
I rose for the purpose of putting these facts before the House. They are perfectly well known to the Chancellor and I know that they excite his sympathy. I wonder whether a bigger surplus could be provided, for if the Chancellor of the Exchequer could see his way to grant some relief to the oppressed local authorities, he would be doing a very good work and one which, I believe, would find support in all quarters of the House from those who know the facts. It is no fault of the local authorities that they had to borrow at these rates and it is no fault of the man who lent the money that he will not be paid off at par. I hope that the Government will in these hard cases grant some increased concession.

6.15 p.m.

Mr. MORGAN JONES: I should like to tell the Chancellor of the Exchequer that we do not propose to divide on this Resolution. We appreciate the fact that the point that my hon. Friend the Member for Ebbw Vale (Mr. A. Bevan) was raising may perhaps be deemed to be slightly outside the purview of this Resolution, but we are very anxious that the Chancellor of the Exchequer should keep in mind the very grave position of the local authorities. They are, one might almost say, struggling, stumbling and staggering in the midst of heavy municipal burdens, burdens which, as the right hon. and gallant Member for Ripon (Major Hills) said, are not burdens of their own seeking entirely, but in some degree burdens which are heavier by reason of direct Government action. Authorities were in the midst of public
works at the beginning of the War, and those works were stopped by the Government. If those works could have been continued, they would have been completed at a cheaper rate, but they had to be resumed at a much heavier cost, and consequently at a much heavier rate of interest. I am sure that the case is familiar to the Chancellor of the Exchequer. Perhaps we are stretching a point in raising the point to-day, but once again I would invite the House to reiterate the appeal that my hon. Friend made and I ask the House and the Chancellor of the Exchequer to keep constantly in mind the appalling burdens under which so large a section of local authorities now groan on account of financial difficulties. I am absolutely convinced that the Government must step in with regard to this matter. They did what they could in 1927–28 under the Local Government Act to stretch out the burdens of local authorities evenly, but in spite of that Act these areas are still obsessed with these heavy burdens, and something will have to be done of a definite and specific character to help them. We content ourselves with having made an appeal to the Chancellor of the Exchequer, and I am sure that he will give his closest attention to the matter.

Orders of the Day — FINANCE [POWER TO BORROW FOR CERTAIN FINANCIAL PURPOSES]

Resolution reported,
That the whole or any part of the sums required in the current financial year for the purposes mentioned in paragraph (a) or paragraph (b) of sub-section (4) of section twenty-three of the Finance Act, 1928, as amended by any subsequent enactment, may be provided out of money borrowed for the purpose under section one of the War Loan Act, 1919, instead of out of the permanent annual charge for the National Debt.

Motion made, and Question proposed, "That this House cloth agree with the Committee in the said Resolution."

6.19 p.m.

Mr. MABANE: It is appropriate that the House should have some short explanation from the Chancellor of the Exchequer of the reason why he thinks
it necessary to ask the House to adopt this Resolution. It is an important power for which he is asking. He is asking for power to borrow a sum, which in the accounts for last year was £9,060,000, to provide for the statutory sinking funds under the Finance Act, 1928. That power was asked for and granted last year and the year before. In those years there was some reason to suppose that the cost of the interest and management of the National Debt would so so high that it would not allow a margin between the cost and the amount budgeted to provide for the various statutory sinking funds. To-day, the House is entitled to ask the Chancellor of the Exchequer to say why he considers it necessary this year to ask for powers to borrow this larger amount. This year he has budgeted for a sum of £224,000,000 as the cost of interest and management of the National Debt. Last year the actual outgoings to provide for the interest and management of the National Debt was £211,657,000. The Chancellor of the Exchequer made certain conversions last year which meant economies to the extent of £1,650,000. That means to say that on the same basis as last year the cost of the interest and management of the National Debt in the current financial year ought to be £210,000,000. The Chancellor of the Exchequer, however, budgeted for £224,000,000, which leaves a margin of £14,000,000 out of which he can provide for those statutory sinking funds which cost £9,060,000 last year.
There is only one thing that can happen to make the cost of the interest and management of the National Debt higher than the £210,000,000, and that is that the cost of the floating debt will increase. Last year and the year before the average rate of interest on the floating debt was very low—12s. 6d. per cent. Last year the Chancellor of the Exchequer, in providing for the cost of the National Debt, suggested that the rate might rise, but it did not. This year, with some diffidence, he suggested that in the current year the cost of the floating debt might rise. So far as I can see there is nothing in the financial prospects that lead us to suppose that the cost of the floating debt will increase substantially. Would it be really so serious if the rate of interest on the floating debt did increase? I think I
am correct in saying that if last year's rate of 12s. 6d. per cent. were doubled to 25s. per cent., it would mean only an additional cost of £5,000,000. That is to say, the cost would be £215,000,000 instead of £210,000,000. That would still leave the Chancellor of the Exchequer with £9,000,000 with which to provide for his statutory sinking fund.
I have no objection in principle to borrowing for the statutory sinking funds, but I think I am right in saying that it is the first function of this House to resist the demands of the executive for excessive supplies and to resist the demands of the Chancellors of the Exchequer for power to borrow money when that money is not necessary. If the Chancellor of the Exchequer could show that he will need to get this money by borrowing in the current year I should not object, but if the House of Commons is to preserve its pristine function of looking after the taxpayers' money, we might on this occasion ask the Chancellor to justify the request that he is making in this Resolution that he should be given power to borrow this large sum of money to meet the statutory sinking funds, and he ought to show why the House ought to believe him when he suggests that by some possibility the amount that he has provided, £224,000,000, for the cost of interest and management of the National Debt will not be sufficient to provide for the statutory sinking funds.

6.25 p.m.

Mr. CHAMBERLAIN: I understand from the observations of my hon. Friend that he put down his Amendment—in line 4, to leave out from "enactment," to the end, and to add
shall be provided out of the permanent annual charge for the National Debt"—
with a view to drawing from me some explanation rather than with a desire that I should follow the particular procedure which he indicates. If that be so, let me say at once that I tried to make it clear in my Budget speech that in fixing the sum of £224,000,000 as the fixed debt charge, I was fixing a sum which I anticipated might leave something for redemption of debt at the end of the year; in other words that that sum would be higher than would be required to meet the cost of interest and management. But there is no certainty in these matters, and I must provide for
the possible contingency that events, which neither I nor my hon. Friend can foresee, may raise the rate of interest on Treasury Bills to a sufficient extent to require for the series of interest and these sinking funds together, the whole sum allowed for in the fixed debt charge, and more, so that there would be a deficit to be met. It is to meet that contingency, which my hon. Friend cannot deny is conceivable, that I ask the House to give me this power to borrow.

Orders of the Day — WAYS AND MEANS.

REPORT [15th April].

Resolutions reported:

CUSTOMS AND EXCISE.

ENTERTAINMENTS DUTY.

1. "That, as respects payments for admission to entertainments held on and after the first day of July, nineteen hundred and thirty-five, entertainments duty shall be chargeable subject to the following variations:

(a) the duty shall cease to be charged on payments not exceeding sixpence;
(b) the duty shall be charged at the reduced rates set out in the following Table in a case where all the performers whose words or actions constitute the entertainment are actually present and performing and the entertainment consists solely of one or more of the following items, namely, a stage play within the meaning of the Threatres Act, 1843, a ballet, a performance of music (whether vocal or instrumental), a lecture, a recitation, a music hall or other variety entertainment, a circus, or a travelling show.

TABLE.


Amount of Payment.
Duty


Where amount the payment, excluding the amount of duty:



Exceeds 6d. and does not exceed 8½d.
One halfpenny.


Exceeds 8½d. and does not exceed 11d.
One penny.


Exceeds 11d. and does not exceed 1s. 1½d.
Three halfpence.


Exceeds 1s. 1½d. and does not exceed 1s. 4d.
Two pence.


Exceeds 1s. 4d. and does not exceed 1s. 6½d.
Two pence half-penny.


Exceeds 1s. 6½d. and does not exceed 1s. 9d.
Three pence.


Exceeds 1s. 9d.
Three pence for the first 1s. 9d. and one penny for every 5d. or part of 5d. over 1s. 9d.

And it is hereby declared that it is expedient in the public interest that this Resolution shall have statutory effect under the provisions of the Provisional Collection of Taxes Act, 1913."

WITHDRAWAL OF REBATE ON HEAVY OILS USED FOR ROAD TRANSPORT.

2. "That—

(a) on and after the eighth day of August, nineteen hundred and thirty-five, no oils other than light oils shall be used as fuel for a mechanically propelled vehicle constructed or adapted for use on roads, if a rebate has been allowed on the delivery of the oils for home consumption and has not been repaid in accordance with regulations made by the Commissioners of Customs and Excise;
(b) where oils, other than light oils, are delivered for home consumption on or after the first day of August, nineteen hundred and thirty-five, and it is intended to use the oils as fuel for such a vehicle as aforesaid, a declaration shall be made to that effect, and thereupon no rebate shall be allowed in respect of the oils;
(c) for the purpose of this Resolution oils shall be deemed to be used as fuel for such a vehicle as aforesaid if they are used as fuel for any engine with which the vehicle is equipped, whether for the propulsion of the vehicle or not."

SUGAR (ARTIFICIAL REDUCTION OF POLARISATION).

3. "That, as from the sixteenth day of April, nineteen hundred and thirty-five, any sugar chargeable with a duty of customs or excise which has been so treated, whether by the addition of invert sugar or otherwise, as to reduce its polarisation, shall be chargeable with the duty as if it were of a polarisation exceeding ninety-nine degrees.

And it is hereby declared that it is expedient in the public interest that this Resolution shall have statutory effect under the provisions of the Provisional Collection of Taxes Act. 1913."

BEER (PRIMING AND COLOURING SOLUTIONS).

4. "That, as from the sixteenth day of April, nineteen hundred and thirty-five, any Excise Duty chargeable on beer by reference to the worts thereof shall in the case of a brewer for sale be chargeable and be deemed always to have been chargeable as if priming and colouring solutions were worts.

And it is hereby declared that it is expedient in the public interest that this Resolution shall have statutory effect under the provisions of the Provisional Collection of Taxes Act, 1913."

RICE IMPORTED IN THE HUSK.

5. "That, as from the sixteenth day of April, nineteen hundred and thirty-five, the duty of Customs chargeable on rice imported in the husk shall, instead of being charged
under Part I of the Import Duties Act, 1932, be charged under section one of the Ottawa Agreements Act, 1932, and shall be a duty at the rate of two-thirds of a penny per pound:

Provided that sub-section (2) of section one of the last-mentioned Act shall not apply in relation to the said duty.

And it is hereby declared that it is expedient in the public interest that this Resolution shall have statutory effect under the provisions of the Provisional Collection of Taxes Act, 1913."

SOYA BEANS.

6. "That, as from the first day of August, nineteen hundred and thirty-five, soya beans shall cease to be exempted from the general ad valorem duty, and the Import Duties Act, 1932, as amended by any subsequent enactment, shall have effect accordingly."

VALUATION OF GOODS FOR PURPOSE OF AD VALOREM DUTIES.

7. "That it is expedient to make further provision for the valuation 4 imported goods for the purpose of any enactment for the time being in force whereunder a duty of Customs is chargeable on the goods by reference to their value."

LICENCE DUTY ON CERTAIN MOTOR VEHICLES.

8. "That, as from the first day of January, nineteen hundred and thirty-six, where a mechanically propelled vehicle is constructed or adapted for use and used for the conveyance of a machine or contrivance and no other load except articles used in connection with the machine or contrivance, the vehicle shall, notwithstanding that the machine or contrivance is built in as part thereof, be chargeable with licence duty as a goods vehicle and as if the machine or contrivance were burden and were not to be included in the unladen weight of the vehicle for the purpose of computing the amount of the duty:

Provided that nothing in this Resolution shall apply to any vehicle chargeable with duty under paragraph 4 of the Second Schedule to the Finance Act, 1920, as amended by the Finance Act, 1933."

INCOME TAX.

CHARGE OF TAX.

9. "That—

(a) income tax for the year 1935–36 shall be charged at the standard rate of four shillings and sixpence in the pound, and, in the case of an individual whose total income exceeds two thousand pounds, at such higher rates in respect of the excess over two thousand pounds as Parliament may hereafter determine;
(b) all such enactments as had effect with respect to the income tax charged for the year 1934–35 shall have effect with respect to the income tax charged for the year 1935–36.

And it is hereby declared that it is expedient in the public interest that this
Resolution shall have statutory effect under the provisions of the Provisional Collection of Taxes Act, 1913."

HIGHER RATES OF INCOME TAX FOR 1934–35.

10. "That Income Tax for the year 1934–35 in respect of the excess 4 the total income of an individual over two thousand pounds shall be charged at rates in the pound which respectively exceed the standard rate by amounts equal to the amounts by which the rates at which Income Tax was charged in respect of the said excess for the year 1933–34 respectively exceeded the standard rate for that year.

And it is hereby declared that it is expedient in the public interest that this Resolution shall have statutory effect under the provisions of the Provisional Collection of Taxes Act, 1913."

AMENDMENT AS TO RELIEF IN RESPECT OFLIFE INSURANCE PREMIUMS.

11. "That—

(a) on a claim under Section thirty-two of the Income Tax Act, 1918, as amended by any subsequent enactment, for an allowance of tax in respect of life insurance premiums or other payments, no allowance shall be given at a rate of tax greater than one-third of the standard rate—

(i) if the taxable income of the claimant does not exceed one hundred and thirty-five pounds; or
(ii) in respect of the amount, if any, by which the premiums or payments exceed the amount by which the claimant's taxable income exceeds one hundred and thirty-five pounds;

(b) for the purposes of this Resolution the expression "taxable income" in relation to a claimant means his total income less any amount on which he is, by virtue of Sub-section (1) of Section forty of the Finance Act, 1927, entitled to relief by way of a deduction of tax.

And it is hereby declared that it is expedient in the public interest that this Resolution shall have statutory effect under the provisions of the Provisional Collection of Taxes Act, 1913.

6.29 p.m.

Mr. MORGAN JONES: I beg to move, in line 5, after "repaid," to insert "to the extent of fifty per cent. thereof."
I assume, Mr. Speaker, that you will take together this Amendment and the second one which stands in my name—in line 11, to leave out "no rebate," and to insert "a rebate of three pence halfpenny." We now return to the discussion which we had on the day following the opening of the Budget. The Chancellor of the Exchequer's proposal in
regard to heavy oils was the one surprise which was presented to the House. I must confess to the right hon. Gentleman that, after having had a fortnight to examine his proposal in better perspective, it does not strike me in quite the same way as it did when I considered it first. I tried quite honestly to look at it from the point of view of the Chancellor of the Exchequer, and, having tried to do that, I admit at once that from his point of view as Chancellor of the Exchequer there is some case for his proposal. Naturally, as Chancellor of the Exchequer, he has to keep his eye upon his revenue, and as the guardian of the revenue he told the Committee that unless he took some active steps, such as are embodied in this Resolution, he would lose something like £1,200,000 a year. It was a loss, a growing loss, which he could not contemplate with equanimity. Therefore, he was not prepared to remain quiescent, and in order to safeguard his revenue he proposed the tax with which we are now concerned. I understand that by reasons of the regulations of this House he is not able to make the change he desires before 1st August, and, therefore, he will only get in the current year something like £100,000.
I want to approach this problem as fairly as I can, and to do so one has to keep in view not only the difficulty of the Chancellor of the Exchequer, which I admit, but also the point of view of all those who are concerned in the imposition of the tax, those who will have to pay this tax into the Exchequer. I must in fairness say that sound arguments can be advanced on both sides. It is fair to recognise that the Chancellor of the Exchequer is not proposing to do as heinous a thing, if I may use that adjective in respect of his action, as I feared at first he was doing, and, having regard to the fact that he has equalised the licence duty, he is making quite an honest attempt to try to balance the thing as fairly as possible. It is an attempt to put the Diesel-driven vehicle and the petrol-driven vehicle on all fours from the point of view of taxation. From the short view of temporary revenue considerations it is an arguable proposition that the Chancellor of the Exchequer may seem to be right, but on the longer view I think he may conceivably be shown to be wrong. Indeed, I rather sensed that
the Chancellor himself feared the possibility—I do not say he admitted it—and wanted to reassure us that certain consequences were not the consequences he desired to supervene, for he told us:
I certainly have no desire to cramp the development of the Diesel engine."—[OFFICIAL REPORT, 15th April, 1935; col. 1629, Vol. 300.]
He indicated that he, too, had turned over in his mind the possibility that this imposition might in some way interfere with the development of the Diesel engine generally. There are three interests which are or may be indirectly involved in the Chancellor of the Exchequer's decision. There is, first, the trade with which I am personally associated as the representative in this House of a coal mining area. The coal trade might be indirectly involved in the consequences of this decision. When the penny tax was first imposed, it proved beneficial immediately to the coal trade as certain hotels and buildings of that sort, which up to that time had been using oil for the generation of heat, at once reconverted to the use of coal. It is fair to argue that if you add a slightly heavier tax a similar result might supervene, and that a larger return might be seen in the use of coal. That is a possibility, but I doubt very much whether it is logically tenable on that ground, because with an extra tax of 7d. you may reach a point where the extra 7d. may so damage the prospective development of the Diesel engine that you might in the end impede the increasing use of heavy oil. The Diesel engine depends very largely at the moment upon the use of imported oil, and although it may sound to many people heterodox as coming from this side of the House I am prepared to say—I want to be fair in the matter℄that if the Chancellor of the Exchequer had devised some system whereby he could have given some special encouragement to the use of home-produced heavy oil in conjunction with the Diesel engine as distinct from the use of imported oil, there might have been something to be said in favour of the proposition, because he would be doing something to improve the development of the Diesel engine, and, at the same time, might be encouraging the production of heavy oil from our own natural resources of coal. In that way he would help both activities. That is not what has been done. Speaking as the representative in this House
of a coal mining area I admit that if a proposition like that had been put before us it would have been very hard indeed to oppose it, because the Chancellor of the Exchequer knows as well as I do that so desperate is the condition of the coal producing areas that they would snatch at any straw which might give them a chance of saving themselves from further decay.

Mr. CHAMBERLAIN: The hon. Member appears to be under the impression that this is an Excise duty as well as a Customs duty. If so, he is under a misapprehension. It is only a Customs duty.

Mr. JONES: I appreciate that—

Mr. CHAMBERLAIN: And there is a preference on home-produced oil.

Mr. JONES: I feel that if instead of imposing a tax upon imported oil the Chancellor of the Exchequer had done something by way of assisting the direct production of heavy oil from our own natural resources, he would have done the two things—stimulated the production of heavy oil in our own country, and avoided the deleterious effect which may result from this proposal on the Diesel engine itself. The other interest is the road interest. We were told by the right hon. Gentleman that he is going to apply this imposition only in respect of vehicles which use the roads. Why? His interest in approaching this matter originally was a revenue interest; his only justification as Chancellor of the Exchequer is to safeguard his revenue. I submit that his revenue is just as much jeopardised by the use of the Diesel engine on the railways as it is upon the roads, yet the right hon. Gentleman specifically excludes the Diesel-driven vehicle which runs on the railway from the operation of this tax. Why? Everybody knows that railway authorities, like municipal authorities, are making big experiments with the Diesel engine. There is a train running now between Cardiff and Birmingham which is driven by a Diesel engine, and I presume it depends on heavy oil. Why is that Diesel engine excluded from the imposition of this taxation, whereas a similarly driven engine on the roads is to be taxed? Perhaps in the course of years this experiment, which is now being tried by the railways on certain lengths of their lines, may be considerably extended, and
the more it is extended the greater will be the loss of revenue to the Chancellor of the Exchequer. I still await any justification for singling out the Diesel-driven vehicle on the roads from those on the railways.
Take air transport. We are now in the presence of developments the end of which no one can tell. Already they are competing for passenger traffic with steamboats across the seas, and if present indications are anything to go by, we are going to see a development on a considerable scale of aerial passenger transport inside the confines of our own country. If the Chancellor of the Exchequer is going to allow air transport to compete with other forms of transport, and is going to excuse them the payment of this tax, then the terms imposed on the road are unfair conditions. Why is air transport to be excused? What is the case for it? The Chancellor of the Exchequer's argument must be based on loss of revenue. That is his whole case; that was the justification given in his Budget speech. Therefore, if he excuses the Diesel engine on the railways or in the air, he is thereby encouraging a form of transport which, the more it is encouraged and developed, deprives him the more of the revenue that he so much requires.
I understand that those who are responsible for building this type of vehicle with Diesel engines anticipate that one of the more dire results of the Chancellor's proposals will be in respect of the small vehicle, the vehicle of three tons or thereabouts. The grounds for that apprehension I frankly confess as a layman I do not understand. If it be true that the small three-ton vehicle stands mainly to be hit by this provision, what is the kind of person who uses such a vehicle chiefly? He is the small trader who cannot afford a big vehicle but feels that some sort of mechanically-propelled vehicle is essential to his business. I suggest that if that be true, the Chancellor may, perhaps unwittingly, be adding another burden to the shoulders of those who find it sufficiently hard now to hold their own in business.
Let me turn to another side of this matter. I have an unhappy feeling that this policy does not entirely arise from the consideration of revenue. I rather have the feeling that there are other interests in the background. Of course
I cannot say so categorically, but it looks like that. We must all agree that the British engineering industry in recent years has made stupendous advances. I believe that there is about £300,000,000 of capital involved in the industry. If we speak in terms of workers there are about 1,250,000 employed. We can see then what a vast place the industry is taking in our national activities. According to the returns of the Traffic Commissioners to the Ministry of Transport for 1933–34 the colossal total of 5,418,000,000 passengers were carried by motor vehicles of one sort or another in that year, and the revenue was about £58.2 millions. If we contrast that with the railways, we find that the railways carried 1,579,000,000 passengers, and that their revenue was about £57.8 millions. In the short space of time which is within the recollection of all of us we have substantially changed the travelling habits of the people, largely through the coming of one form or another of mechanically-propelled vehicle. It is becoming, therefore, an important element in our industrial and commercial life. It seems to me that the Chancellor is taking upon himself a very big responsibility indeed, and, though he does safeguard himself against additional loss of revenue, he may unwittingly deal a blow at the development of an industry which is responsible for the employment of very many people.
One other observation on this matter, though it does not concern the Chancellor, I admit. There are two new elements that have entered since the Chancellor presented his statement to the House. One of them he cannot control. I am referring to the effect of this proposal on local authorities. Large numbers of local authorities have gone in for mechanically-propelled vehicles, and very many of those vehicles have Diesel engines. If the authorities are to find themselves in the position that they must either run their ventures at a loss or, to save themselves from loss, increase passenger fares, the burden on people in those areas is going to be rather heavier than the Chancellor of the Exchequer seemed to anticipate. In addition to this extra burden which may—I do not say it will—fall upon local authorities through the possible change from the Diesel engine to the petrol engine, and the consequential extra financial outlay, let us
remember this new element to which I now direct attention. There has come an adjudication upon the question of the assessment of railways, and I gather that the position so far is a nil assessment for railways throughout the country. That is going to be a very big handicap in favour of the railways and against the people who have to pay heavy rates for road transport. If the Chancellor is going to use artificial means to force more people and more goods on to the railways and to handicap those who run big transport systems, and if in addition to that there is this new handicap of a complete removal of rateable assessment for railways through the new judgment, I suggest that the handicap in favour of the railways and against motor transport is going to be unfair in the extreme.
Another feature has developed to-day. I am not sure that it has not a direct association with the Chancellor's proposals. We hear to-day that the price of petrol is to be increased by a penny a gallon. I venture to assert that that announcement has more than a close relationship with the Chancellor's policy. I do not say that the Chancellor is responsible for it—far from it. He has responsibility enough already. But I do say that it is a direct consequence of his policy that other people have availed themselves of the decision which he announced in his Budget speech.
I have tried not to cover grounds which I have previously traversed. I do not recede from my previous argument regarding the somewhat unfavourable and inhospitable attitude which the Chancellor takes in respect of the researches of scientists and so on. I have to-day tried to cover new ground, keeping in mind that the Chancellor must safeguard himself against inevitable or avoidable loss, but I do submit that while that may on the short view be justifiable, and may be a policy which will be acceptable or favourable to railway or other interests, taking the long view I think it will prove to be inimical to the development of the new form of transport in this country, and will hamper it by adding an unfair handicap compared with its railway competitors.

Sir BASIL PETO: Would the hon. Member explain the connection between the rise in the price of petrol by a penny
a gallon to-day, and the withdrawal of the duty on heavy oils? I cannot see any connection between the two.

Mr. JONES: In a sentence I cannot give an adequate answer, but shortly I may say that it is surely clear when you limit competition, as is the obvious effect of this proposal, that it is possible for those who control the commodity concerned to raise its price.

6.57 p.m.

Lieut.-Colonel MOORE-BRABAZON: I do not think that the Chancellor of the Exchequer will be frightened very much by the attack that has been made by the Opposition upon this particular duty; but the speech made by my hon. Friend the Member for Caerphilly (Mr. Morgan Jones) was interesting, and certainly it was comprehensive and wide. I thought he was quite ingenious in the way he brought in the assessment of railways and associated it with a tax upon heavy oils. We ought to be perfectly clear in our mind that it is a Customs duty and not an Excise duty. Because of that it is a direct incentive to the treatment of coal for conversion into oil. It is practically a gift of 7d. a gallon. Everyone knows that in the turning of coal into oil it is easier to turn it into the heavier oils than into the lighter ones. Consequently it will be easier for those people who follow that kind of enterprise to produce the Diesel type than to produce the petrol type, and therefore it may be of very great benefit to the coal mines of the country. I hope it will be. I have said before that I was weaned on petrol. Now I am a Diesel enthusiast. I think that in these Debates one should state what interests one has. I am a Director of the Associated Equipment Company, which makes the omnibuses of London. Lately that company has been making practically 90 per cent. with Diesel engines. You see these buses on the streets of London, and you smell them on the streets. Although the smell is unpleasant it is much healthier than petrol.
I wish to congratulate the Chancellor on one point. In this tax he does not penalise aviation. In a struggling young industry, which really is not a competitor with road transport, to impose a heavy tax on its petrol is a very severe handicap, because nothing is more important
from the point of view of aviation than to get it to pay by itself. As the right hon. Member for Epping (Mr. Churchill) once said, civil aviation must fly by itself. It is only on that basis that it will be of any use to the world. What is going to be the effect of the high tax on the Diesel compression ignition engine, an engine which is more difficult to build, costs more to build, and consequently a man who buys it buys it on the basis of whether he can save on his extra capital costs by his running costs. Even with the present tax if an operator is running on a basis of 35,000 miles a year, it will be to his advantage still to run a Diesel engine. On the other hand, it will penalise that lighter type of delivery van which does not run on a basis of 100 per cent. It seems that operators will have to keep their huge vans running night and day in order to pay, but that is probably happening to-day. It is quite incredible the distances which these heavy lorries now travel.
The hon. Member for Caerphilly, I think, missed one very considerable point which he might have made—the statement by the Chancellor that he was doing this because of loss of revenue. Where can be say that he is losing revenue? He says it on the basis that he wants this money put into Imperial funds, whereas on the present basis, with the high licence duty, that licence duty is going into the Road Fund; and, jealous of that money which was going into the Road Fund, he upsets the whole system of taxation on this new form of industry in order to get his share into the Exchequer. That is very disturbing to an industry. It would have been much better to say that there is certainly a case that the Exchequer should have a certain amount of money out of the oil tax, and it would have been much better if, instead of making a raid on the Road Fund, he had said to the Minister of Transport that a part of this increased licence duty should go to the Exchequer and not to the Road Fund. I think that there is a case for that. But we have had the whole system of taxation upset, which is very disturbing to the industry. Once having granted a system of taxation, however high it is, let us work to it. It is only two years ago that the Government raised the licence duty on the Diesel engine cars on purpose to make them pay for the fact that they were not
paying tax on fuel. For no other reason than to get that money into the Exchequer instead of the Road Fund, the whole of this development is to be upset.
I very much doubt whether the relationship between the Treasury and the Road Fund can go on very much longer. The Treasury were always jealous of the Road Fund. It was a thing to which they objected from the very start. They said: "Taxation must go into the general pool; it shall not be reserved for any special fund." And the Road Fund, like a child by itself, has been attacked all along the line by the Treasury. Here is another attack. This is not increasing revenue; it is to get the revenue that would otherwise go to the Road Fund. These commitments which are undertaken by the Government through the Ministry of Transport for the development of our roads, once they are made, should be guaranteed now by the Treasury. Then there could be no postponement, no delay, in the building of these great works which are wanted from every point of view. But at present we have these periodical pinpricks against this fund which was made for the roads, and although I would hate to see it go, because I think it is so essentially sound, it is so defenceless, it has not got a Cabinet Minister behind it, and year after year we have a raid on it; and, in a way, this change of taxation to which we are agreeing is another attack on that fund.

7.7 p.m.

Mr. PETHERICK: The House has just listened to a speech by an expert. I do not profess to be an expert, and will speak for only a few minutes. The hon. and gallant Gentleman professed to think that the Chancellor of the Exchequer had some Jesuitical motives behind him in putting forward this proposition. He seems to think it a disguised attack on the Road Fund. I believe that the object of the alteration in the tax on heavy oil is two-fold: First, in order to gain more revenue, and, second, in order that the two sections of vehicles on the road should be put on an approximately comparable basis. The question I should like to ask my right hon. Friend is this: How has he assessed the figure? The two sections will be paying a tax of 8d. per gallon. That is a
very large rise for these owners of heavy oil-burning vehicles. How did the right hon. Gentleman arrive at that figure of 8d. in the case of both? I shall be particularly interested to hear how he got that figure, because there is undoubtedly a great deal of unrest and anxiety in the country on the part of those owners of the Diesel burning vehicles who think that the rise is far too sudden and rapid, and that some figure nearer approaching the previous figure would have been the right one to adopt.

7.9 p.m.

Mr. MOLSON: I am sure that the Chancellor of the Exchequer is entitled to congratulate himself on the reception that has been given to the tax this year, after the very different reception given to the somewhat similar tax imposed on fuel oil some few years ago. When I saw the Amendment on the Order Paper I imagined that there was going to be a strong denunciation of this tax similar to that which was launched by the Opposition two years ago. I am very glad that those Members of the Socialist party who represent coal mining constituences have recognised the very material benefit which my right hon. Friend conferred on the coal industry by the imposition of that duty.
It has been estimated by the Coal Utilisation Council that, adding together the actual reconversions from oil to coal, and the consumption of coal in works and public buildings, which otherwise were on the point of being converted to oil, the coal mining industry now disposes of 1,203,000 tons of coal more than if my right hon. Friend had not imposed that duty two years ago, which at the time was so strongly criticised by the Socialist party. Now, two years after, I should like to express, as a Member for a coal mining constituency, my gratitude to the Chancellor for having taken this further step in one of the few directions in which it is possible for him to give protection to the British coal mining industry. The figures recently issued by the Ministry of Transport show that during the last year or so there has been a quite extraordinary increase in the number of vehicles of different kinds which use Diesel oil instead of petrol. In the year 1934–35 the increase in the number of hackney carriages driven by Diesel oil was no less than 151 per cent., and of goods there
was an increase of 56 per cent. No wonder that in circumstances of that kind the Chancellor should be concerned as to a protective revenue, and I am glad to think also that he should desire to discourage an excessive use of the Diesel engine. The hon. and gallant Member for Wallasey (Lieut.-Colonel Moore-Brabazon) rather suggested that in imposing this duty on heavy oil my right hon. Friend was in some way giving undue preference to the petrol engine; but, in view of the fact that the duty upon the two oils is exactly the same per gallon, and that at the same time the licence duty of the Diesel engine has been reduced to that of the petrol engine, it seems to me that there is complete and absolute fairness in the policy which the Chancellor of the Exchequer has pursued.
The fact that the energy in a gallon of Diesel oil is one and a half times as much as that in petrol seems to show that where there is a legitimate advantage in the use of the Diesel engine, that has been left to the Diesel engine. I have some figures here which show that the increased use of the Diesel engine has not been due to the greater efficiency of that engine. Costs of running have been greater. The only reason for the remarkable increase in the use of Diesel engines is that, owing to taxation policy in the past, fuel has been so much cheaper. I hope that the effect of this duty will be to encourage the use of coal and its derivatives. There has been a most disastrous reduction in the number of heavy wagons on the roads which are driven by steam or coal gas, a reduction of no fewer than 4,000 wagons in four years; and it is estimated that each 1,000 wagons when in use consume enough coal to keep 650 miners employed for one year. That is a reduction of something like 450,000 tons of coal or nearly as much as the exports from this country to Finland under the trade agreement with that country. At the same time trams are gradually being superseded, and it is a question whether they are going to be replaced by trolley omnibuses which use electricity or by motor omnibuses driven by Diesel oil. I therefore feel that while my right hon. Friend is safeguarding the revenue, he is also giving the coal-mining industry, as far as possible,
the benefit of the protective policy which this country has followed with regard to other industries. I only wish that he could have gone a little further. I support the plea of the hon. Member for Caerphilly (Mr. M. Jones) that the railways should be discouraged from undue experimentation in Diesel engines.

Mr. MORGAN JONES: I did not make such a plea.

Mr. MOLSON: I beg the hon. Member's pardon, but, even if I am mistaken in that, I am not unwilling to put forward a plea on my own responsibility to the Chancellor of the Exchequer on those lines. At the present time the consumption of coal on the British railways is 17,000,000 tons and the depression in the coal-mining industry would obviously be appallingly increased if there were any general transference from coal to oil in the case of the railways.

7.18 p.m.

Mr. CHAMBERLAIN: The hon. Member for Caerphilly (Mr. Morgan Jones) did not attempt to offer any justification for the particular figure which he advocates in his Amendment, a figure which I understand to be 4½d. instead of 8d. As a matter of fact if he goes into these two Amendments carefully, he will see that one destroys the other, but I take it that the figure I have mentioned indicates the intention which he has in mind. I should like to pay some acknowledgement to him for the very fair manner in which he has treated this subject. I am glad that he has treated it in that way because it has been a somewhat difficult question to deal with and I have had by no means an easy task in making up my mind as to the right course to take. The situation with which I was faced, as, I think, the hon. Member himself recognises, was one which I could not allow to remain. There was a hole in the wall surrounding my revenue which was rapidly increasing in size, and if something had not been done I should undoubtedly have been put to a very severe loss which I was not prepared to face.
Although in the course of this Debate I have been credited with mixed motives, I frankly state to the House that my primary object in this matter has been the safeguarding of the revenue. I believe it to be true that the duty which is here proposed will help the railways,
not because goods which are now being conveyed by road will be transferred to the railways, but because goods now being carried on the railways will continue to be carried on the railways, whereas had the tax been left where it was, those goods might well have gone on to the roads. In either event it will help the railways, and as the railways are run by steam which is generated by the burning of coal, it must also help the coal industry. Nevertheless my primary object has been to see that in the hothouse atmosphere in which the Diesel engine is being developed, owing to the difference in taxation between heavy oil and light oil, I am not robbed of any of my revenue.
An hon. Member opposite asked me how was it, if I was honest in saying that the protection of the revenue was my primary concern, that I was not taxing the oil used in Diesel engines on the railways. I should have thought that the answer was obvious. It is because the Diesel engines on the railways are not competing with petrol engines on the railways. So far as I know the railways are not at present running petrol engines in competition with their steam engines. Therefore, there is no loss of revenue by reason of the adoption of the Diesel engine on the railways. When we come to air transport the case is different. There, indeed, it is true that if the Diesel engine supersedes the petrol engine I am going to lose revenue. But it has not done so yet and the fact that I have not attempted to apply this tax to air transport is a proof of what I say, that I do not desire to cramp the development of the Diesel engine. I consider that if I had applied it to Diesel engines for air transport it would have been tantamount to cramping the development of the Diesel engine which at present suffers from certain disadvantages for air purposes in comparison with the petrol engine. It is for the designers and makers of the Diesel engine to develop their engine so as to adapt it for use in air transport and if they are successful and if the Diesel engine shows signs of superseding the petrol engine for use in aeroplanes, no doubt some successor of mine will put some further tax upon Diesel oil used in aeroplanes. But that is not in contemplation now.
An hon. Member opposite said he was given to understand that the effect of the
tax was peculiarly onerous in the case of three-ton vehicles and my hon. and gallant Friend the Member for Wallasey (Lieut.-Colonel Moore Brabazon) who is an expert upon these subjects, said something which tended to confirm that view. Figures have been given to me of the actual effect of the taxation of goods vehicles of three to four tons which I take to be the class of vehicles indicated. These are figures extracted from the report of the Conference on Road and Rail Transport in 1932. Taking the average annual mileage of such vehicles as 15,250 the existing total taxation—with the discriminatory licence duty in the case of the Diesel vehicles℃is £125 on the petrol vehicle and £70 on the Diesel vehicle. The taxation is, therefore, in favour of the Diesel vehicle to the extent of £55. Under my proposal by which the oil duty is raised to 8d. and the licence duty equated, the taxation on the Diesel vehicle is raised from £70 to £93 but as the taxation on the petrol vehicle remains at £125, there is still a very large margin of £32 in favour of the Diesel engine. I suggest that in view of those facts it can hardly be said that there is unfair discrimination against the Diesel engine which still retains that considerable advantage over its rival. The fact is that it is the petrol engine which is unfairly treated on account of the special favour in taxation given to this increasingly dangerous competitor, and although this proposal does not by any means go the whole way to putting things on a level, yet it goes some distance in that direction, and I think it will do something to remove this grievance and to safeguard my revenue.
My hon. Friend the Member for Penryn and Falmouth (Mr. Petherick) asked how I arrived at the figure of 8d. To be candid I took the same figure for the Diesel oil engine as for the petrol engine and there is no more scientific justification than that for the figure. I thought it sounded pretty fair to have the same rate of taxation on both, provided that at the same time the licence duty was equated.

Mr. PETHERICK: What I was trying to convey was that in the case of the heavy oil-burning engine—the Diesel engine—the costs of construction and running are much higher than they are in the case of the petrol engine, and I
thought it was not unreasonable to expect some difference in the incidence of the tax on that account. I was wondering if that factor had been taken into consideration.

Mr. CHAMBERLAIN: I did take that into consideration in putting the tax at 8d. instead of at 1s. 2d., which would have been the actual equivalent, taking into account the extra mileage which heavy oil will produce. I had to try to strike a balance between all these various factors and it seems to me that the balance which I have struck is not unfair.
My hon. and gallant Friend the Member for Wallasey has, he thinks, discovered that I am not really trying to save the revenue, because, he says, there will be no difference in the number of Diesel engines which will be put into use in consequence of the raising of the tax. If he is right, then that at once wipes out any grievance which has been expressed by those who say that it will adversely affect the Diesel engine industry. But I would point out to him that as regards the Diesel oil engine, as well as the petrol oil engine, I am safeguarding my revenue. Whether it is the Diesel engine or the petrol engine, I am still going to take my 8d. tax, and therefore I am safeguarding the revenue.
I can assure my hon. and gallant Friend that he is mistaken if he thinks that under a cover of this proposal to equate the licence duty I am making a concealed attack on the Road Fund. If I want to make an attack on the Road Fund I can assure him there will be no concealment about it. But in the present instance let me point out to him that the difference in licence duty upon the Diesel engine vehicle and upon the petrol engine vehicle ought not to go to the Road Fund at all because the roads are not worn any more by the Diesel engine vehicles than by the other vehicles. There is no real justification in equity for that increase going to the Road Fund. But that is not the reason why I equated the licence duty. The difference in the licence duty was made because it was recognised that something ought to be done to equalise the oil duty. My hon. and gallant Friend says we ought not to make these periodic pin-pricks; that we ought to decide what our taxation is
going to be and stick to it. You cannot do that when conditions are continually changing. It is the changing conditions which have caused the change in the duty. As long as the Diesel engine was in the merely experimental stage, it was not worth making a change in the taxation. It is now entirely beyond the experimental stage, and, that being so, there is no justification in postponing the putting of the duty on a more satisfactory basis.
One of my hon. Friends—I think it was the hon. Member for Penryn and Falmouth—said that engine makers thought the tax was rather sudden, and it would have been better to have imposed it a step at a time. That is, of course, a possibility. I could have made one step now and another step in a year's time, but I do not think that would have helped the situation. If there be anything in the argument, which I do not admit, that the development of the Diesel engine would be injured by the tax, it would be just as much injured by the knowledge that the tax was coming in steps as that it was coming all at once.
I think I have replied to the various points that have been raised. I do not know whether I shall have satisfied the hon. Member opposite, but I do assure him that this is not an artificial means of forcing people off the roads. It is a defensive measure taken by a hard-pressed Chancellor of the Exchequer to preserve his revenue, and, incidentally, it does benefit some of his constituents, and, if it does, I am sure nobody will be better pleased than he or I.

7.32 p.m.

Dr. ADDISON: I want to draw attention to a very important consideration that has not received the attention it deserves in this discussion on which I was interested to hear the hon. Member for Doncaster (Mr. Molson). I believe he belongs to the progressive section of the Conservative party, or the reformist or "reconstruction" group, or whatever it may be called. I listened to his argument that he is very glad that this kind of principle has been adopted by taxation. If the Chancellor is encouraged to proceed in this matter, it means that railways will not be allowed to use a better form of engine. They will still have to be put back to the older
forms of fuel used. I can hear him congratulating the Chancellor of the Exchequer because he finds a parallel with the case of Mrs. Partington if she had been successful in keeping the ocean back with her mop. He would then have said, "Put a tax on mops, and do not allow Mrs. Partington to use a mop successfully."

Mr. MOLSON: One indication that I belong to a progressive party is that I believe in protection for home industries and home products.

Dr. ADDISON: That is very interesting, but it is no reply to the argument that the Diesel Oil Tax is a penalty on improvement. It is placing obstacles deliberately in the way of the development of an improved type of engine. Even if what the hon. and gallant Member for Wallasey (Lieut. - Colonel Moore-Brabazon) said proves to be correct with regard to the heavier engine, it still must be true that if the engine has to pay an extra 7d. a gallon on its fuel it must be prejudiced to that extent more than it was before. Now we have the right hon. Gentleman with his accustomed candour—and I honour him for it—saying that some day or other, when the development of the engine has reached such a state of perfection that heavy oil may be used in aeroplanes, then some Chancellor of the Exchequer will come along and say, "Let us penalise this improvement. Let us penalise the application of the Diesel engine to aeroplanes. Let us increase the tax." I honour him for his frankness.

Mr. CHAMBERLAIN: I leave it to a Labour Chancellor of the Exchequer.

Dr. ADDISON: He will be imitating his own great example. Seriously, I can understand the right hon. Gentleman's case when he says, "I am losing revenue and, therefore, I must do something or other to get more revenue." But you would not expect him to design the reinforcement of his revenue in such a way as deliberately to penalise an improvement. It may be, and I hope it will be, that the Diesel engine will encourage the development of low temperature carbonisation, or whatever the process is, for the distillation of coal in order to get heavy oil from home-produced coal. But what guarantee will the producers have in the example set by the Chancellor?
He holds a veiled threat over the head of the Diesel engine maker which might equally well apply to the man who manages to distil oil from our own coal. He will say, "A day has arrived when you are competing with my revenue. I will put the clock back; I will tax you." The fate of the man who applies the utilisation of our own coal for producing oil will be the same as he somewhat sketchily indicated will be the fate of somebody in connection with the development of the Diesel engine for aeroplanes.
Those of us who have taken any interest in the history of our canal system know perfectly well how legislation helped the railways to choke the canals. We have a very lively recollection of that. We are told quite frankly that one of the purposes behind this tax is to enable the railways to carry goods which otherwise would have been carried on the road through the improvement of the Diesel engine. The Chancellor of the Exchequer told us that. In other words, it is another way of assisting the railways to block another form of improvement just as they blocked the improvement of the canals by destroying them. When the old-fashioned four-horse coaches were on the road, there was no movement to bolster up coach proprietors and prevent railways using locomotives which ran on a steel line instead of on the road. There was no suggestion that the incidence of taxation was to be used in that fashion. Entirely apart from the question of safeguarding his revenue, which I can well understand, the Chancellor of the Exchequer has deliberately designed this tax and the method of its application so as to penalise the improvement of a new type of engine. That must be the result, and I think we ought not to allow this to pass. We cannot allow this new principle in the application of taxation to go unchallenged in this House.

7.41 p.m.

CHORLTON: Mr.
I wish to confine my remarks to the technical side of this question. The unfortunate nature of this increase is really in its extent. That is to say, if it had pot been done to the extent of a change from 1d. to 8d., I think the effect would not have been so material as it is going to be. The engine of which we are speaking is not a new engine. It is an old engine, but in the last few years it has been applied to road transport
and this country has taken a lead greater than any other country. At any rate, it has achieved that lead in the end. The light-weight high-speed Diesel engine as now made over here is in advance of anything in the world. That is greatly to the credit of the motor engineers and of all concerned who developed it. The risk arising out of this sudden and violent change is that it will be repressive to their development and the research work which is necessary to maintain and continue our lead.
We have, I think, got into a position in which we are leading the world and can count upon an increasing foreign trade arising out of that. I am not speaking of the use of the engine on the road because that is an £ s. d. question, but I am speaking of the use of the engine as expanding our foreign trade. If this increase had been very much less, or had been kept back to some future time, we should have got such a lead in the manufacture of this engine and in the cost and design and all things which would have helped foreign trade, that it would have put us in front, of any other nation to an extent that I do not think those concerned realise. Years ago, when the engine was first brought out by Diesel in Germany, it was very much helped by its local associations, by the people of that country. They designed and developed the engine for marine purposes in front of everybody else in the world. We found its economy so great that we had to use it ourselves. That meant that we had to go to Germany, and we must have spent in royalties alone hundreds of thousands of pounds. Now we have got the lead over Germany, or any other Continental country, or America.
Although, perhaps, I ought not to say it here, I know more about those engines than almost anybody associated with this particular industry because of the time I have spent on them and the different countries I have visited in order to determine where they stand. I was in Prague three weeks ago and saw the development of the engine there for railway purposes. I would like to press this point very strongly. We are going to run the risk of losing a very considerable foreign trade which we need so much to-day if we persist with an impost to this extent, and I do beg the Chancellor of the Exchequer
that, even though in the end he intends to raise the tax to this level, he will not do it to-day, but do it in steps and give us our opportunity. We have the lead in the air. Another hon. Member mentioned the possibility of a heavy oil engine being designed for the air. They were designed for airships, and we have still in this country retained a certain lead arising out of that. If, however, such engines are to be saddled by the heavy cost of fuel, they will not be used at all. There are two reasons why this fuel should be used—economy for long-distance flights and the reduced cost of fuel. If the duty upon air services is to be at this rate, it will be the death blow—

Mr. CHAMBERLAIN: The hon. Member was not in the House when I said that it will not be at this rate.

Mr. CHORLTON: I am delighted to hear that.

7.46 p.m.

Mr. MACQUISTEN: The charges put on road transport are far too high, and it is simply done to stimulate the railways. How would railways like to be charged £1 a ton? We ought to have developed more roads and left the railways to fight their own battles. The tremendously high rates they have charged have done more to hamstring the trade of this country than anything else. This duty will indirectly affect the aerial service, because, in discouraging the development of the Diesel engine for road use, it will affect the development of this engine for use in the air. We want to get rid of the use of petrol, because it is far too dear, and do all we can to encourage the development of engines which can use the cheaper form of fuel.

Amendment negatived.

Motion made, and Question proposed, "That this House doth agree with the Committee in the said Resolution."

7.49 p.m.

Mr. MORGAN JONES: May I ask the Financial Secretary to explain the case
for this Resolution. He will agree, I think, that the Chancellor of the Exchequer, in presenting his Budget statement, did not dwell upon this point nor upon one or two other subsequent points which we must presently discuss.

The FINANCIAL SECRETARY to the TREASURY (Mr. Duff Cooper): I must ask my hon. Friend to excuse me on this occasion from explaining this particular tax, which falls under the Board of Trade rather than under my Department. My hon. Friend has not given me any notice, and I am not complaining of that, but I am not in a position to give the explanation for which he asks.

Mr. JONES: I appreciate the difficulty of the Financial Secretary, and I do not complain of his failure to respond, but it is not our business when we are discussing Budget Resolutions to give notice that we are going to raise any particular point.

Mr. COOPER: I am not complaining.

Mr. JONES: I appreciate that, and I am not complaining of the hon. Gentleman's inability to give the information, but I think that the Minister concerned ought to be here to give the necessary explanation in case the House asks for it. Perhaps we have gone more hurriedly over the business than was anticipated in Government circles, but I shall be glad, none the less, for some statement of the case.

Mr. COOPER: I have now received some information, and I am only too glad to comply with the hon. Gentleman's request. The position is that at the present time rice in the husk is imported subject to an ad valorem duty of 10 per cent. under the Import Duties Act. The Resolution which the House is being asked to pass increases that duty to two-thirds of a penny a lb. as from the 16th April. One of the aims of the Government of India at the Ottawa Conference was to increase the trade of India with the United Kingdom in rice. The United Kingdom supplies of rice for human consumption had been imported up to that time in the form of husked or cleaned whole rice of which India sent us about 500,000 cwt. and other countries over 1,000,000 cwt. in 1932. One of the provisions of the Agreement concluded with India at Ottawa was an undertaking on
our part to increase the duty on "rice, husked, including cargo rice and cleaned rice whole, but not including broken rice" to 1d. a lb., and this duty was imposed as from the 1st January, 1933, under the Ottawa Agreements Act.
At the same time, and in order to encourage the more general use of broken rice as a feeding stuff throughout the world India asked that it should be imported free of duty from all sources. A provision to this effect was also included in the Ottawa Agreement. Since that time the trade in the importation of rice in the husk after being dehusked and cleaned in the United Kingdom has increased. No such imports are recorded in any of the years 1929–31, but they amounted to 2 cwt. in 1932; 19,000 cwt. in 1933; and 333,000 cwt. in 1934. These imports came almost wholly from foreign countries. The possibility of this change in the nature of the trade was not in the minds of the negotiators at Ottawa, and as the imports of "paddy" seriously threaten to undermine the preference which India obtained in this market for husked rice the Government of India asked that the appropriate duty should be imposed on "paddy" to safeguard their trade. That, roughly speaking, is the reason we are proposing to increase the duty.

7.54 p.m.

Mr. MORGAN JONES: I hope the Financial Secretary will not take it as personal when I say that a protest ought to be made against the way in which this Resolution has been presented to the House. I am not reflecting on him in any way, because I rather gather that this subject belongs to the Board of Trade rather than to the Treasury. It is a little too much to ask the House to be content with such a perfunctory statement. We ought to have a defence of this proposition made by the Minister responsible, and it is rather taking advantage of the rights of the Opposition to treat us so summarily. I hope that steps will be taken to get the Board of Trade represented in this discussion, and in order to enable a representative to have time to come, I propose to say a word or two.
What is the effect of this proposal, which I have tried to understand as best I can from the reading of the document which the hon. Gentleman gave to the
House? The obvious effect is that a very essential element in working-class homes is to cost more. To ask us on the mere ipse dixit of the Government to accept it without question and without making any inquiry is a little too much. In the course of the Budget Debate it has fallen to my lot and that of many of my hon. Friends to protest emphatically against the habit which has grown in the lifetime of this Government of increasing the share of indirect taxation as compared with direct taxation, and we are again to-night presented with a proposal which must necessarily have a substantial bearing upon working-class families. It amounts to nearly 1d. per pound on rice. If the wage-earning capacity of the working classes were increasing at a substantial pace there might be a case in justification for this proposal. But there is no such prospect before the working moment. Therefore, to ask them with their meagre earnings to contemplate with equanimity this extra imposition by means of indirect taxation is a proposition against which we must raise our voices in protest. I still see no sign of the representative of the Board of Trade, and since there is no such Minister present I propose to ask your permission, Mr. Deputy-Speaker, to move to report Progress, to call attention to this matter. This is a matter of supreme importance to the House of Commons.

Mr. DEPUTY-SPEAKER (Captain Bourne): If the hon. Member will put his Motion in the form of moving the adjournment of the Debate, I will accept it.

Mr. MORGAN JONES: I beg to move, "That the Debate be now adjourned."
I do so in order that we may have an opportunity of calling attention to the absence of the responsible Minister while we are discussing this very important subject. We are not making an undue tax upon the time allowed to us by the Government. It is only once a year that we are able to review the financial provisions of the Government, and it is usual for us to have two or three or even more days alloted for the discussion of the Financial Resolutions. But Ministers now apparently find it impossible to sit beyond 7 o'clock to listen to a financial discussion. They cannot arrange their
business sufficiently well to provide for a rota of Ministers to defend the Government's policy. What is this Parliament really coming to? We are entitled to an answer from the Government, and we insist upon an answer from the appropriate Minister, and a defence of the financial policy as put before us on the Order Paper to-day. I think it would be a staggering piece of information for the people outside if the Motion I have now submitted were suddenly put and carried and the country learned that we had had to adjourn because there was no Member of the Ministry sufficiently interested to come and defend the Government's policy. I hope that I have in not too exaggerated language made my protest on behalf of my hon. Friends against the absence of the Minister concerned with this matter. I can only leave it to other Members to express their resentment against this studied neglect on the part of the Ministry of the Opposition's rights and the interests of the country at large.

8.3 p.m.

Mr. COOPER: The hon. Member who has just sat down has made a surprisingly violent speech and has declared that there is nobody here prepared to defend the Government's policy. Well, I am here, and to the best of my ability I have defended the Government's policy. The hon. Member has declared himself unsatisfied with that defence, but if he cares to read to-morrow the defence I have made of this proposal I think he will find that it was a perfectly sufficient and adequate defence. The representatives of the Board of Trade do not happen to be in their places at the moment. They are attending to their duties as the hon. Member opposite knows. I understand that the Ministers are attending at the present moment a Chamber of Commerce function. The hon. Member has suggested that this is a very important matter and that the country would be astonished if it were passed over without debate. But I would remind the House that we have had three days in which to discuss the Budget proposals and that during that time this particular proposition has not been referred to by a single Member. Not a single question has been asked and no Amendment has been put down with regard to it.
Therefore, I would absolve the Ministers representing the Board of Trade from all responsibility in this matter; the responsibility is entirely mine. My hon. Friend the Parliamentary Secretary to the Board of Trade told me that he hoped I would be present when this matter was discussed and the hon. Member knows that I was present. As he also knows, the discussion of all the other resolutions has been got through with excessive rapidity, and I express my regret that at the moment—having just returned to the Chamber—I had not the papers in my hand which would have enabled me to give him the adequate reply to which I naturally thought he was entitled. Two minutes afterwards I had the papers placed in my hand, and I gave such a reply as I could—which I thought was not an inadequate reply. With this explanation, and with the regret that I express if I was not able to intervene at the moment that the hon. Member asked me to do so, and in view of the information I have given, I would suggest to the hon. Member that he should withdraw his Motion.

8.6 p.m.

Dr. ADDISON: I would like to support my hon. Friend's Motion, because this, I think, really is an unprecedented Debate. The chief function of the House of Commons is finance—that is the key to all our power—here is a proposal to levy a tax on a common article of food which finds its way into the poorest homes, and the House is not accorded the elementary politness and courtesy of the presence of a Minister belonging to the Department responsible to defend or explain the Government's proposal. I am sure every one of us is sorry for the Financial Secretary to the Treasury in the position in which he unfortunately finds himself. He did the best he could with the brief that an enterprising Private Secretary thrust into his hands after he had got on to his feet, and I admire the ingenuity and readiness with which he adjusted himself to the brief, about which he appeared to know nothing at all. He did it, on the whole, very well, but that is not good enough when the House of Commons is asked to tax the food of the people. It is proposed to put a tax of two-thirds of a penny a pound on rice, which is a very common article of diet, and we are asked to impose this tax without any Minister
being here to explain what it is or to defend it, or to give the House of Commons any information as to the circumstances which gave rise to this proposal.
I have read the Resolution, and I hope that other Members have read it too. If they have read it and can understand it, they are a jolly sight cleverer than I am. The Resolution says the the tax is to be charged, not under Part I of the Import Duties Act, 1932, but under Section I of the Ottawa Agreements Act, 1932. We ought to have had someone to tell us what this Ottawa Agreements Act of 1932 means and what it involves. It may be a very good Act, but personally I do not carry the details of it in my head; and it was perfectly evident that the Financial Secretary to the Treasury did not carry them in his head either, for he glossed rapidly over this portion of his brief. He has not the faintest idea of what it is about and neither have I. Neither, in fact, has anybody else in the House. It is not right that we should be asked to pass a Resolution and to impose a tax on the poorest families in the land when the Minister in charge of it has not the faintest idea of what it, is about. It is an affront to the House of Commons, and I hope my hon. Friend will press his Motion.

8.10 p.m.

Mr. DAVID MASON: I entirely support the Motion submitted by the hon. Gentleman. The Financial Secretary to the Treasury comes down here and makes apologies for his colleague of the Board of Trade not being present. We should have been delighted to see him, but we hear that he is engaged at a Chamber of Commerce function. After all, the House of Commons takes predecence over a Chamber of Commerce. But that is not the point. All Ministers are responsible for attending here, but the real responsibility rests with the Treasury. They are responsible for the Bill, and yet the Financial Secretary comes here and has to commence his speech by stating that he knows nothing about the subject. We are asked to pass a Resolution dealing with the imposition of a tax, and when a perfectly proper request is made by the Opposition for an explanation of the tax, the representative of the Government has the effrontery to say to my hon. Friend that
he is unable to give an answer. Let us examine this Resolution. [Interruption.] Pardon me, this is not a joke. Because you happen to have a large majority, we of the Opposition may be able to teach you a lesson.

Mr. DEPUTY-SPEAKER: On a Motion to report Progress and adjourn the Debate, the hon. Member is expected to confine himself to that subject. The Resolution is not now before the House.

Mr. MASON: I am sorry if I have transgressed, but my object in supporting the Motion was to point out the inability of the representative of the Treasury to explain the Resolution. Incidentally, the Resolution does mention that it is proposed in the public interest, and I think that is a very good reason for supporting the Motion to adjourn the Debate. If we are asked to pass a Resolution authorising the Government to impose a tax which is in the public interest, the Treasury ought to be able to show whether in fact it is in the public interest.

Mr. DEPUTY-SPEAKER: That would not be in order on the Motion for the adjournment of the Debate. That will apply when the Debate is resumed.

Mr. MASON: In the circumstances, I will content myself with saying that I entirely support the Motion, and I hope that many others in the House, whatever their views may be in regard to the tax, will also support it on the general principle and in the interests of the dignity and responsibility of the House of Commons. Many of us must feel most indignant that we should be asked to come here and be unable to express our views. The Motion for the adjournment of the Debate seems to be a proper Motion, entirely in accordance with the high dignity of the House of Commons.

8.13 p.m.

The PARLIAMENTARY SECRETARY to the BOARD of TRADE (Dr. Burgin): I apologise to the House at once if I have been at all at fault in this matter. Members who have spoken on this subject, however, cannot be aware that elaborate precautions had been taken to make inquiries through the usual channels as to whether there was any
question to be raised on this Resolution. If by any misunderstanding any Member wanted to raise a question and I was not here to answer at once, I apologise profusely to the House for not being in my place at the moment. But I had taken elaborate precautions by inquiry through all the usual channels to find out whether there was any question likely to be raised on this Resolution, and I had received an assurance that such was not the case. That is not given as an answer, but as an explanation to satisfy the House as to why I was not present. Immediately I was told that anybody desired a word of explanation—and every Member is entitled to such explanation as he requires—I came to my place. I regret that the House should be put to any inconvenience, and I hope with that explanation the hon. Member will see fit to withdraw the Motion.

8.14 p.m.

Mr. LANSBURY: Of course, we accept the hon. Gentleman's statement, but it does not meet the point. I understand that through the usual channels he was informed that there was no opposition on the Paper to this particular Resolution. That is true. But I want to say, on behalf of the House generally, that some Minister should be here to answer questions on all these points irrespective of anything that a Chief Whip or anyone else may say. I think the hon. Gentleman realises that now, and I am sorry that he did not realise it before, because when there are three Ministers at the Board of Trade the hon. Gentleman, if he personally found it inconvenient to be here, could have arranged for one of his colleagues to answer the questions. Up to the present we have refrained from attacking each other personally, and most certainly we shall not do that to-night, but the question here is that of the right of the House of Commons to have Ministers present when matters of this kind are being discussed. I should hope that my hon. Friend will now withdraw the Motion.

Mr. MORGAN JONES: I was responsible for the Motion, and I now beg to ask leave to withdraw it in view of the explanation which has been given.

Motion, by leave, withdrawn.

Original Question again proposed, "That this House doth agree with the Committee in the said Resolution."

Mr. JONES: This impasse arose—

Mr. DEPUTY-SPEAKER: The hon. Member has already exhausted his right to speak.

Mr. JONES: I was only asking a question.

Dr. ADDISON: I hope I may be allowed to ask the Parliamentary Secretary to the Board of Trade to explain to us the circumstances which gave rise to this proposal and the character of the proposal itself.

8.17 p.m.

Dr. BURGIN: I very readily respond to a request for information about a Resolution which, by itself and without explanation, may be difficult to follow. Rice in the husk is called paddy. At present it is subject to a 10 per cent. duty under the Import Duties Act. This Resolution increases that duty to two-thirds of a penny a pound as from the 16th April of this year for this year. One of the objects of the Government of India at the Ottawa Conference was to increase the trade between India and the United Kingdom in rice. The United Kingdom's supplies of lice for human consumption had been imported in the form of husked, or clean, whole rice. India sent, roughly, 500,000 cwts. and other countries a little over 1,000,000. One of the provisions of the agreement concluded with India at Ottawa was an undertaking on our part to increase the duty on rice that was husked to 1d. per pound. That duty was imposed. Since 1932 there has grown up a trade in importing paddy, which is then husked and cleaned in this country. No such import at all existed in 1929, 1930 or 1931. In 1932 they were two cwt., in 1933 20,000 cwt., and in 1934 333,000 cwt. India saw that a trade in foreign paddy was growing up, those imports coming from foreign countries. The possibility of that trade was not contemplated at Ottawa at all. As the imports of paddy threatened to undermine the preference which India had obtained for husked rice India suggested to us that the matter might be put right by a small increase of that duty.
This is a demand made by the Government of India. It is in the spirit of Ottawa. Since Ottawa this importation of foreign paddy has arisen. The rate of duty of two-thirds of a penny per lb.
has been calculated to give India a preference on paddy corresponding to the preference of 1d. on cleaned rice, after allowance is made for the loss of weight. The intention of the duty is to discourage the importation of foreign paddy. The yield of the duty, therefore, will be very small. That is the whole explanation of the matter. A trade sprang up which threatened the preference and an adjustment is being made in order to give the same preference to India as was afforded by the Ottawa Agreement. It is perfectly straightforward. I will add to this explanation in any detail that anybody likes, because I have the figures and details, but I think the principle is right. This House has time and again said that if Ottawa gave a particular preference it was not going to stand by and see that preference frustrated by other means, and this is merely an attempt to frustrate the evasion of this particular preference caused by the growing importation of paddy from foreign sources.

8.22 p.m.

Mr. HARCOURT JOHNSTONE: Having listened to this Debate on the interesting subject of rice, I think the answer read by the Financial Secretary to the Treasury just as interesting as the answer given by the Parliamentary Secretary to the Board of Trade. There was a considerable likeness between the two answers, and it would not surprise me to know that they were given from the same document. The only variation really lay in the difference in the timbre and tone of voice of the two hon. Gentlemen, and I do not think it was worth the while of my hon. Friends below the Gangway "kicking up such a fuss," if I may say so, in order to get the Parliamentary Secretary of the Board of Trade here to give us the same, no doubt, extremely ingenious, and even satisfactory explanation, provided by the Department. But this point occurs to me. Is it to be the practice to call upon other Departments than the Treasury to explain the Finance Bill Clause by Clause and Resolution by Resolution? I do not think that is a wholesome or, indeed, a necessary proceeding. I believe that my hon. Friend the Financial Secretary to the Treasury could, with a few minutes' work this morning, have mastered the admirable brief expounded by the Parliamentary
Secretary, and have presented it to the House with all the dexterity and wit for which he is so well known, and I earnestly hope that during the further course of these discussions we shall not have to send for the Minister of Transport or the Minister of Labour or the President of the Board of Trade.

Mr. DEPUTY-SPEAKER: The hon. Member is getting away from the subject of the Resolution.

Mr. JOHNSTONE: I think that even if I have strayed a little from the path it is relevant to this difficult and technical subject of rice to ask why it should be necessary to have to send for the Parliamentary Secretary to the Board of Trade to support the duty when the case could perfectly well have been expounded by the Financial Secretary to the Treasury. There is nothing in what the Parliamentary Secretary has said that would seem to make it necessary for a particularly technical individual like himself

self to have to come here to give the explanation. When set down by the very able permanent officials whom he has at his command it is a perfectly simple explanation. Although I and my friends do not agree with the principle which lies behind the duty, I can well understand that if the Government are pursuing a policy of Imperial Preference arising out of the Ottawa resolutions they should find it necessary to maintain the preference which they have agreed with India to give. I hope that even with such simple points as this it will not be necessary on future occasions to have to send for all kinds of Departmental Secretaries in order that they may explain points which the representatives of the Treasury on that bench can perfectly well do, and ought to do.

Question put, "That this House doth agree with the Committee in the said Resolution."

The House divided: Ayes, 168; Noes, 44.

Division No. 162.]
AYES.
[8.27 p.m.


Acland-Troyte, Lieut.-Colonel
Edge, Sir William
Lyons, Abraham Montagu


Adams, Samuel Vyvyan T. (Leeds, W.)
Elmley, Viscount
MacAndrew, Capt. J. O. (Ayr)


Albery, Irving James
Emmott, Charles E. G. C.
McCorquodale, M. S.


Allen, Lt.-Col. J. Sandeman (B'k'nh'd)
Essenhigh, Reginald Clare
McKie, John Hamilton


Applin, Lieut.-Col. Reginald V. K.
Everard, W. Lindsay
Maclay, Hon. Joseph Paton


Aske, Sir Robert William
Fleming, Edward Lascelles
McLean, Major Sir Alan


Assheton, Ralph
Ganzoni, Sir John
Macmillan, Maurice Harold


Atholl, Duchess of
Gillett, Sir George Masterman
Macquisten, Frederick Alexander


Balfour, George (Hampstead)
Glyn, Major Sir Ralph G. C.
Manningham-Buller, Lt.-Col. Sir M.


Balfour, Capt. Harold (I. of Thanet)
Goff, Sir Park
Margesson, Capt. Rt. Hon. H. D. R.


Barclay-Harvey, C. M.
Graham, Sir F. Fergus (C'mb'rl'd, N.)
Marsden, Commander Arthur


Bevan, Stuart James (Holborn)
Greene, William P. C.
Martin, Thomas B.


Birchall, Major Sir John Dearman
Grenfell, E. C. (City of London)
Mills, Major J. D. (New Forest)


Blaker, Sir Reginald
Grigg, Sir Edward
Milne, Charles


Blindell, James
Gritten, W. G. Howard
Monsell, Rt. Hon. Sir B. Eyres


Bossom, A. C.
Gunston, Captain D. W.
Moreing, Adrian C.


Boulton, W. W.
Hamilton, Sir George (Ilford)
Morgan, Robert H.


Bowyer, Capt. Sir George E. W.
Hannon, Patrick Joseph Henry
Morris-Jones, Dr. J. H. (Denbigh)


Braithwaite, J. G. (Hillsborough)
Harbord, Arthur
Morrison, G. A. (Scottish Univer'ties)


Brass, Captain Sir William
Harvey, George (Lambeth, Kenningt'n)
Morrison, William Shephard


Broadbent, Colonel John
Haslam, Henry (Horncastle)
Munro, Patrick


Brown, Col. D. C. (N'th'l'd., Hexham)
Headlam, Lieut.-Col. Cuthbert M.
Nation, Brigadier-General J. J. H.


Browne, Captain A. C.
Heilgers, Captain F. F. A.
Nicholson, Godfrey (Morpeth)


Buchan-Hepburn, P. G. T.
Herbert, Capt. S. (Abbey Division)
Nunn, William


Burghley, Lord
Hills, Major Rt. Hon. John Waller
O'Donovan, Dr. William James


Burgin, Dr. Edward Leslie
Hope, Capt. Hon. A. O. J. (Aston)
Oman, Sir Charles William C.


Cadogan, Hon. Edward
Hore-Belisha, Leslie
O'Neill, Rt. Hon. Sir Hugh


Carver, Major William H.
Howard, Tom Forrest
Ormsby-Gore, Rt. Hn. William G. A.


Chamberlain, Rt. Hon. N. (Edgbaston)
Hudson, Robert Spear (Southport)
Orr Ewing, I. L.


Chorlton, Alan Ernest Leofric
Hume, Sir George Hopwood
Pearson, William G.


Christie, James Archibald
Jamieson, Douglas
Peat, Charles U.


Cobb, Sir Cyril
Jones, Sir G. W. H. (Stoke New'gton)
Penny, Sir George


Colfox, Major William Philip
Jones, Lewis (Swansea, West)
Percy, Lord Eustace


Cook, Thomas A.
Ker, J. Campbell
Perkins, Walter R. D.


Cooper, A. Duff
Kerr, Hamilton W.
Petherick, M.


Crooke, J. Smedley
Lamb, Sir Joseph Quinton
Potter, John


Crookshank, Col. C. de Windt (Bootle)
Law, Richard K. (Hull, S. W.)
Powell, Lieut.-Col. Evelyn G. H.


Crookshank, Capt. H. C. (Gainsb'ro)
Leech, Dr. J. W.
Pownall, Sir Assheton


Croom-Johnson, R. P.
Lister, Rt. Hon. Sir Philip Cunliffe-
Procter, Major Henry Adam


Cruddas, Lieut.-Colonel Bernard
Little, Graham-, Sir Ernest
Ramsay, T. B. W. (Western Isles)


Denman, Hon. R. D.
Llewellin, Major John J.
Ramsbotham, Herwald


Denville, Alfred
Lockwood, John C. (Hackney, C.)
Ramsden, Sir Eugene


Dugdale, Captain Thomas Lionel
Lovat-Fraser, James Alexander
Rankin, Robert


Duncan, James A. L. (Kensington, N.)
Lumley, Captain Lawrence R.
Reid, James S. C.(Stirling)


Reid, William Allan (Derby)
Shepperson, Sir Ernest W.
Todd, A. L. S. (Kingswinford)


Remer, John R.
Smiles, Lieut.-Col. Sir Walter D.
Turton, Robert Hugh


Rickards, George William
Smith, Sir J. Walker- (Barrow-In-F.)
Wallace, Captain D. E. (Hornsey)


Roberts, Sir Samuel (Ecclesall)
Smith, Louis W. (Sheffield, Hallam)
Ward, Irene Mary Bewick (Wallsend)


Ropner, Colonel L.
Somerville, D. G. (Willesden, East)
Ward, Sarah Adelaide (Cannock)


Rosbotham, Sir Thomas
Sotheron-Estcourt, Captain T. E.
Warrender, Sir Victor A. G.


Ross Taylor, Walter (Woodbridge)
Southby, Commander Archibald R. J.
Wedderburn, Henry James Scrymgeour.


Ruggles-Brise, Colonel Sir Edward
Spears, Brigadier-General Edward L.
Williams, Herbert G. (Croydon, S.)


Russell, R. J. (Eddisbury)
Spender-Clay, Rt. Hon. Herbert H.
Wills, Wilfrid D.


Rutherford, John (Edmonton)
Stanley, Rt. Hon. Oliver (W'morland)



Rutherford, Sir John Hugo (Liverp'l)
Stevenson, James
TELLERS FOR THE AYES.—


Samuel, M. R. A. (W'ds'wth, Putney).
Storey, Samuel
Sir Walter Womersley and Major


Sanderson, Sir Frank Barnard
Strauss, Edward A.
George Davies.


Savery, Samuel Servington
Sutcliffe, Harold



NOES.


Adams, D. M. (Poplar, South)
Griffith, F. Kingsley (Middlesbro', W.)
Mason, David M. (Edinburgh, E.)


Addison, Rt. Hon. Dr. Christopher
Griffiths, George A. (Yorks, W. Riding)
Milner, Major James


Attlee, Clement Richard
Grundy, Thomas W.
Parkinson, John Allen


Banfield, John William
Hall, George H. (Merthyr Tydvil)
Salter, Dr. Alfred


Batey, Joseph
Harris, Sir Percy
Samuel, Rt. Hon. Sir H. (Darwen)


Bernays, Robert
Holdsworth, Herbert
Smith, Tom (Normanton)


Bevan, Aneurin (Ebbw Vale)
Janner, Barnett
Thorne, William James


Brown, C. W. E. (Notts., Mansfield)
Jenkins, Sir William
West, F. R.


Buchanan, George
John, William
White, Henry Graham


Cocks, Frederick Seymour
Johnstone, Harcourt (S. Shields)
Williams, David (Swansea, East)


Daggar, George
Jones, Morgan (Caerphilly)
Williams, Edward John (Ogmore)


Davies, David L. (Pontypridd)
Lansbury, Rt. Hon. George
Williams, Thomas (York, Don Valley)


Edwards, Charles
Lawson, John James



Gardner, Benjamin Walter
Leonard, William
TELLERS FOR THE NOES.—


Greenwood, Rt. Hon. Arthur
Logan, David Gilbert
Mr. Groves and Mr. Tinker.


Grenfell, David Rees (Glamorgan)
Macdonald, Gordon (Ince)



Sixth Resolution read a Second time.

Motion made, and Question proposed, "That this House doth agree with the Committee in the said Resolution."

8.34 p.m.

Mr. MORGAN JONES: Earlier in the afternoon I gave notice to the Chancellor of the Exchequer that, inasmuch as this matter was somewhat briefly discussed by the Chancellor of the Exchequer in introducing his Budget, we should ask for an explanation of the proposal at an early stage of our discussions. Perhaps as the Secretary of State for the Colonies is here, he will deal with the point.

8.35 p.m.

The SECRETARY of STATE for the COLONIES (Sir Philip Cunliffe-Lister): I am very glad of the opportunity to explain this Resolution, which is to remove the soya bean from what is known as the Free List, in order to give effect to the established principle, which I think everyone in this House accepts, of Imperial preference. The importance of giving this preference to a very large number of Colonies in different parts of the world nobody will deny. It has been asked for by a great number of Colonies, although not primarily or principally in order to stimulate the production of soya beans in the territories concerned. I hope, however, that a preference may
stimulate that production. One of the most interesting results that have followed from the policy of preference has been the development in many Colonial and Imperial territories of products which had been little or not at all cultivated, but which, given a modest preference, have been cultivated on an increasing commercial scale. While one cannot say with certainty what will be the prospects for the cultivation of soya beans within the British Empire, there is certainly ground for hope that there may be commercial production. Experiments have already been made in Nyasaland, in Tanganyika, in Kenya, in some of the West Indian territories, and in British Guiana. To take one example, the experiments in Nyasaland look very promising indeed.
But it is not primarily or chiefly in order to stimulate the production of soya beans in the Empire that this preference has been so keenly sought. It is because soya beans are a competitor, and an increasing competitor, of the different oil-yielding substances which the Colonial Empire can produce—palm kernels in West Africa, ground nuts also in West Africa, and, I hope, to be produced in East Africa also, copra produced in different parts of the Empire like Fiji and Ceylon, and so on. And every single Colony which is producing any of these commodities has
asked, even begged, that this preference may be given.
I know it has been suggested that there is not any very serious competition between soya beans and these other oil-yielding substances. I am not going to pose as an expert in this matter, and I am not going to challenge the right of people who are interested in soya beans to speak from their knowledge of that commodity; but I do say to the House that, if you find every single country which is producing ground nuts, copra or palm kernels saying most emphatically that this is a serious, and an increasingly serious, competitor, these people, after all, know their own business quite as well as anyone else does. Moreover, this demand comes, not only from the producers in those countries, but from the people dealing in those commodities here. There is the Liverpool Chamber of Commerce. Nobody is going to say that the Liverpool Chamber of Commerce does not know its business, and the Liverpool Chamber of Commerce has most emphatically petitioned the Board of Trade, in the interests of the West African trade and of the mutual trade between West Africa and this country, that soya beans should no longer be included in the free list; and they have quoted in their published documents, not only their opinion—and I do not think anyone would venture to challenge their opinion as an authoritative commercial opinion—as to the real commercial position, but they have quoted facts and figures which show the seriousness of this competition. I may add that the position has become more serious in this regard since linseed has enjoyed a tariff and a preference. On those facts there can, I think, be no doubt that it is tremendously in the interests of the Empire producers in all these many territories that this article should no longer remain on the free list. Of course, Imperial production will be completely free.
These Colonies are asking for this action at a time of very great depression in their production. It is a time of low prices. I am glad to say that prices have risen a little. I wish I could think that that rise, which is modest indeed compared with the general price level, was likely to be permanent. I hope that prices will not ever go back as low as they were last year—40 per cent. below the pre-war level. That is a very serious
figure at which to have to produce. But I am bound to say that, although I am, as the House knows, an optimist by nature, I do not think we can count on prices remaining indefinitely even at the modest increase which has taken place, because, as everyone knows, owing to the great drought of last year there is a shortage of feeding stuffs in different countries of the world, and there has been a temporary demand for certain oil products in America. I think we should be unwise to reckon on prices remaining even at their present modest level. At the same time, it is becoming more and more difficult for these Colonies to sell in the markets of the world. Great sales used to take place to Germany. After all, this is a great Imperial interest. These people are the best customers we have. If this matter is to be treated as a purely insular proposition, if we are to go in for a policy of isolation, with this country, with its population of 40,000,000, standing by itself and caring for no other market, we shall not see a weekly improvement of 130,000 in the numbers that we have employed. This policy of Imperial trade is a great industrial policy for this country.
What are the circumstances which render this policy necessary? We see Germany trying to make herself self-supporting and, with exchange restrictions, only agreeing to buy here and there on a barter basis, and for one reason or another very limited in any exchange which she has. Evidently we cannot rely on that German market. The American market is largely closed, except when, as at the present time, a temporary need exists. The deliberate policy of the United States of America is to put a high processing tax on these Imperial products of the British Empire in the interests of their own soya bean production. We see France trying, not unnaturally, to follow our example in developing the resources of her own Colonial Empire. We see these other markets closing, so that this market has become more important than ever. That is not the only need, but after all, even if it were the only need, I should not hesitate to make an appeal to the House, because we are the trustees of these great Colonial possessions, and we have discharged our trust pretty well.
I am making an appeal to the House to-night at a time when these very
Colonies, hard pressed, and at a time of low prices and diminishing trade, have given to Lancashire and to the textile industry of this country the greatest benefits that have been given, I think, under any fiscal arrangement. I am glad to be able to come to the House to-night and to state publicly what has been the result of the quota policy which the West African and other Colonies have adopted in the interests of the great textile trade of this country of cotton and of artificial silk. If one could see an increase in exports of 10, 20 or 30 per cent., one would say that one was doing good business. What has been the effect in these very Colonies which are asking for this preference of the quota which they have put on in respect of foreign goods in the interests of Lancashire? This House has been discussing in the last two days the interests of Lancashire trade with a great and natural anxiety. If other markets for Lancashire trade shrink, is it not tremendously important to develop these Colonial markets? I think that the House will be surprised, if they do not know, when I give them some figures. The quota policy was adopted in the course of last summer. The legislation went through in the different places in June, July and August. There was naturally, as always, anticipation. Japanese imports came in rapidly and increasingly during the time when these new measures were passing through the legislatures of the different Colonies, and one, therefore, cannot expect as yet to see the full benefit for Lancashire and the textile trade of these measures, but they are already remarkable.
Let me take a few examples. I will take the first quarter of last year and compare it with the last quarter of 1934—a typical quarter before the quota was in force, and the first quarter in which the quota was in full force. Nigeria is one of the Colonies asking for this preference. The exports of Lancashire cotton piece goods to that Colony were 9,000,000 yards in the first quarter, and in the last quarter of last year the figure had risen to very nearly 14,000,000 yards. In regard to the Gold Coast, which is greatly interested in this matter, the figure is more remarkable. In the first quarter of 1934 the exports of British textiles to the Gold Coast amounted to 3,370,000 yards, and in the last quarter of 1934 to 10,650,000 yards.
To Ceylon, which is very anxious to get this preference, the exports in the first quarter were under 1,800,000 yards, but in the fourth quarter they were nearly 6,000,000 yards.

Sir FRANK SANDERSON: Will my right hon. Friend tell the House what this has to do with soya beans, because none of the countries referred to grow them, and consequently they do not export them?

Sir P. CUNLIFFE-LISTER: I am aware of that fact. I have been invited, quite properly, by the Leader of the Opposition, to explain to the House why, with complete unanimity, His Majesty's Government, are proposing this course, and I am telling the hon. Gentleman, and I am very glad of the opportunity to tell him, that we are commending it with complete confidence to the House as a great piece of Imperial policy in return for the tremendous benefit which has been given by the Colonies to the textile trade of this country. I propose to make my case in all fairness to His Majesty's Government for this preference. I could go on giving example after example. Perhaps my hon. Friend opposes the policy of preference, and, if so, I cannot expect him to support me, but, if he believes that in this mutuality of trade in a great Imperial trade partnership lies the best interests and the progress of this country, I hope that, in spite of any interests he may advocate, he may yet be found in support of this proposal. I will give the House the approximate total figures for all the Colonies. Twenty-eight million yards of piece goods were sent from the textile industries of this country into these Colonies in the first quarter of last year, and in the last quarter of last year that 28,000,000 had grown to 63,000,000 yards.
If the Chancellor of the Exchequer and the President of the Board of Trade came to the House to-morrow with a proposal of this sort as a trade agreement and said, "We have made this as part of the Ottawa Agreement, and we look to see the Lancashire exports go up, not by 30 per cent., but by 150 and in some cases, something like 300 per cent. or even more, would they not have made a good deal?" I have not the least doubt that the whole House, with unanimity, would say: "This indeed is a wise deal which you have made, and
we endorse it." I am sure that the House will be no less ready to endorse this proposal, because it is not a case of waiting for the ratification of an agreement. Here is a case where these Colonies, in a vital necessity of life as things are to-day, have readily come forward in order to help a great industry in this country in the interests of a great Imperial trade partnership. Already they have done their part, and I am certain that the House of Commons is not going to be behind in giving this very modest measure of reciprocity in return for so great and so growing a gain. There is the merit of the case. I put it frankly to the House as a really big piece of Imperial policy, and as certainly a concession, if you will, that this House, rightly anxious about its great textile trade, is certainly going to be ready to give to these Colonies which have given so great an evidence of their desire to help this industry.

Mr. LOGAN: Is the right hon. Gentleman able to give any figures in regard to the exports from the Colonies of palm kernels and such like products which have been displaced by the soya bean?

Sir P. CUNLIFFE-LISTER: I could certainly give figures about those products. They have already been published by the Liverpool Chamber of Commerce, and there is no doubt at all that the increasing import of soya beans into this country has run parallel with the very remarkable diminishing imports into this country of both palm kernels and ground nuts.

Mr. GRAHAM WHITE: Is the right hon. Gentleman speaking of ground nuts or of palm kernels when he says there are diminishing imports?

Sir P. CUNLIFFE-LISTER: I am speaking of the two together. There have been variations, but the diminution in respect of ground nuts has not been anything like as great as that of palm kernels. If you take the average during recent years, ground nuts have perhaps remained steady, but in regard to palm kernels the diminution has been very considerable indeed. In 1919 the imports of palm kernels into this country were 317,000 tons and in 1934, 134,000 tons. If you take palm kernels and ground nuts together, the imports in 1919 were 424,000 tons and in 1934, 246,000 tons. During
that time the imports of soya beans has grown from something like 61,000 or 62,000 tons to about 178,000 tons. These figures show that side by side with the increased importation of soya beans has come the decreased importation of the other commodities, and that is why both the producers of these commodities all over the Colonial Empire and the Liverpool Chamber of Commerce say that it is so important that they should compete on equal terms.
Let me take the objections which may conceivably be raised, because I believe in meeting both sides of a case. Even if the objections were serious ones, I should say that, weighed in the balance against this tremendous increase of imports to which I have referred, we ought to carry out our proposal. What is the objection that can be taken to the proposal? It was said originally that there is a large export trade in soya meal and that you must not prejudice that. That export trade to-day is negligible. I could give figures to the House to show how it has shrunk, not due to any action of this Government but due to restrictions put on in foreign countries. If, however, there is a substance in this argument, then, seeing that we know how to work a tariff, there is always the possibilities of a drawback. I remember discussing this matter some years ago with my hon. Friend the Member for Ealing opposite, and he said: "If we can have a drawback it will be all right." I have a very vivid recollection of that conversation, but I will not go into it. He does not stand by that now, but that was a thing to which he attached importance at that time.

Sir F. SANDERSON: The conversation to which my right hon. Friend refers took place some years ago. What I said on that occasion was that if a tariff or a duty were placed on soya beans it would be some assistance if a duty were placed upon soya oil and soya meal coming into this country.

Sir P. CUNLIFFE-LISTER: I do not want to bind my hon. Friend to anything which he may not have said.

Sir F. SANDERSON: That was in 1932.

Sir P. CUNLIFFE-LISTER: The principle is the same. My hon. Friend is a very good free trader. He likes to have
protection for his own commodities and free entry for his raw materials—a very good principle of Free Trade. But my hon. Friend need have no anxiety in this matter. He has enjoyed protection for the cake which he manufactures and for the oil which he has manufactured in the past, and it will be perfectly open to him in a proper case to go to the Import Duties Advisory Committee in order to show whether any increase is desirable, on merits, in the range of his oil protection or in the range of the cake protection which he now enjoys. That course will be open to him and he will have ample time to take it, because we have not rushed this duty. It is not to come into force until the 1st August. Therefore, there will be ample time for my hon. Friend to make his case for increased protection for his oil or his cake before the Tariff Advisory Committee, who are very expert on the subject.
Let me turn from that point to another anxiety which there may be in the minds of any of my hon. Friends who are more interested in agriculture. Here I think the matter of price is of importance. I am not going to pose as an expert in regard to the rival kinds of cake, although I have the authority of the Ministry of Agriculture for stating that they hold to-day the same view that they held two years ago, that the nutritive value of ground nut cake and soya cake is equal, and that they would not advise anybody to buy ground nut cake rather than soya cake, or soya cake rather than ground nut cake on the point of nutritive value.

Brigadier-General CLIFTON BROWN: It is a question of price.

Sir P. CUNLIFFE-LISTER: Exactly. They are of equal nutritive quality and therefore it depends upon price. Let us look at the prices. My prices are taken from the publication of Mr. Frank Fehr, who publishes a very authoritative statement every year on the prices of oil seed cake and so on. The price of soya cake is £6 13s. 9d., palm kernel cake £5 10s. and ground nut cake £6. Therefore, the nutritive value being equal my hon. and gallant Friend will be able to buy admirable Empire ground nut cake at £6, although my hon. Friend opposite is going to ask £6 13s. 9d. for soya cake. Buy the Empire cake and be a happy family. Even if there be a preference—I do not
mean Imperial preference but a prejudice—in favour of soya cake, let us see how the prices work out. Last year the price of soya beans fell considerably, but the price of soya cake did not. I found certain facts in the manifesto of the Liverpool Chamber of Commerce and I was pretty sure that they must be right, although I thought that they might be coloured. I had the matter looked up for me in the authoritative tables of Mr. Frank Fehr, which everybody will accept.
I want the House to observe these figures from Mr. Frank Fehr's tables. The average price of soya beans in 1933 was £6 7s. 7½d. per ton. In 1934 the average price fell to £5 16s. 4½d., a fall of 11s. 3d. a ton in the price of the raw material. There might have been a fall in the price of soya cake, which might have come down more because there is a pretty big profit, I understand, on oil. I am not, however, an expert in these matters. Did the price of soya cake fall with the fall in the price of the raw material? It did nothing of the sort. Here are Mr. Fehr's figures. The price of soya cake in 1933 averaged £6 15s. The average price in 1934 was £6 13s. 9d.; that is only 1s. 3d. less.

Mr. THORNE: That is commercial morality.

Sir P. CUNLIFFE-LISTER: I do not know anything about the morality; I am concerned at the moment with the facts. There was a fall of 11s. 3d. in the price of the raw material and a fall of only 1s. 3d. in the price of the cake.

Sir F. SANDERSON: I am sorry to interrupt again, but I think we all really want to get the facts. The reason why the soya cakes and oil was reduced by 7½ per cent., compared with a reduction of 9 per cent. in the price of the beans, was because in the process of crushing and extracting the price of the oil went down by no less than 20 per cent., so that you had a reduction of 20 per cent. in the oil and 7½ per cent. in the meal and the cake.

Sir P. CUNLIFFE-LISTER: What apparently the hon. Member for Ealing (Sir F. Sanderson) did was to sell a great deal of his oil oversea and import other oil upon which he made a satisfactory profit, I suppose that on £1,000 of this imported material a profit of £200
or £300 was made. I am not an expert in this business.

Sir F. SANDERSON: I really cannot allow the right hon. Member to make these statements.

Mr. DEPUTY-SPEAKER: I must remind the hon. Member that we are not in Committee.

Sir F. SANDERSON: Statements have been made which are grossly unfair.

Mr. DEPUTY-SPEAKER: The hon. Member will have a chance to make his reply later.

Sir P. CUNLIFFE-LISTER: I am being quite frank with the House, and the figures which I have given are not my own, but the figures supplied by Frank Fehr and Company. There may be excellent reasons why the hon. Member should not pass the difference in price on to his farmer clients. I am pointing out to my farmer friends that the price of the raw material fell by 11s. 3d., but that the price of the cake only fell by 1s. 3d. As a simple, ordinary, common sense person I can only say, that if that difference did not find its way into the pockets of the farmers who bought the cake in the course of last year then, assuming—and it is an improbable assumption—that if you put this duty on the price will rise by anything like the full amount of the duty, there is still somewhere a margin between the price of the raw material and the price to the farmer of the finished article, and I feel that some part of it should be shared with the farmer who buys. If not then the hon. and gallant Member for Newbury (Brigadier-General Brown) can get good Empire ground nut cake at £6, and if he does so he will be a good Empire producer in every sense of the word.
I have endeavoured, at rather greater length than I intended, to explain to the House why the Government, very unanimously, are making this proposal. We are making it because we regard it as a just and an essential part of the great policy of Imperial preference. We believe that these Colonies, which have given this tremendous benefit to Lancashire and given it in advance, have a reasonable claim to this preference. I would not hesitate to come to the House,
nor would the Chancellor of the Exchequer or the President of the Board of Trade, and ask that this should be done even if it involved some sacrifice on our part, but the fact is that it does not involve, or should not involve, if the business is properly done, any material sacrifice on the part of anybody. I commend it to the House as an essential piece of our great Imperial trade policy.

9.11 p.m.

Sir FRANK SANDERSON: I make no apology for rising to oppose the duty on soya beans, because I appreciate the grave results it will have upon the seed crushing and extracting industry of the country. I had intended to make my position quite clear at the outset, but, in view of the remarks of the Colonial Secretary, it is even more essential that I should do so. I am a director of a company which imports a large quantity of soya beans, and to that extent I am interested. I always feel that any Member speaking on industrial matters in this House is between Scylla and Charybdis, because if he speaks as an expert and therefore an interested party, he may be regarded as biased, but if he does not speak as an expert his opinion is without value. I should like to have devoted my speech to a reply to the Colonial Secretary, but if I did so I should not give the House the information which I feel it is essential it should have. When the duty was first introduced it surprised me that the Chancellor of the Exchequer made no reference whatever to it; indeed, it was merely sandwiched in with other Resolutions, and I do not believe that there were many Members who appreciated the fact that this was one of the Resolutions before the House.
I have asked myself what branch of the Government was in fact responsible for the introduction of this tax. I could not believe that the Chancellor of the Exchequer was responsible, because be, like myself, is an ardent Protectionist, and I have yet to learn that he or any other member of the Government is in favour of taxing essential raw materials. I cast my eye along the Government Front Bench and I think of the President of the Board of Trade. I find it difficult to believe that the President of the Board of Trade was in favour of placing a duty upon a raw material, particularly a raw material which comes
solely from Manchuria. The President of the Board of Trade well knows that soya beans are the chief product which cargo vessels going out to China are able to bring back. Were it not for soya beans being exported from China, there is no doubt that all goods which are sent from this country to China would have to pay a considerably increased freightage.
Finally, my eye rested on the Colonial Secretary. I did not know until now that my right hon. Friend was to give his version of this tax before any debate had taken place. I must ask myself what has he in mind, for what purpose is the tax being imposed? He has told us quite frankly that it is being imposed in order to assist the Colonies in the production of other classes of oil-bearing seeds and nuts. He could not make the case that was made with reference to linseed, that he was placing this tax upon soya beans in order to assist the Colonies. It is not a question of Empire preference, because soya beans are not grown in any part of the Empire. They have been grown experimentally, but never to the point at which they could be exported. Indeed, the beans are not grown commercially in any part of the world other than Manchukuo, and therefore the case for a preference to our Colonies falls to the ground.
We then come to the second point which my right hon. Friend made, which was that he wished, by placing a duty upon soya beans, to throw the demand upon Empire products, namely, ground-nuts, copra, and palm kernels. I can assure the House that that is quite impracticable for the reasons I will explain. The soya bean is not in any way on a parallel with the three products that are produced in the Empire. For the enlightenment of the House let me explain briefly what the soya bean is and what its special properties are. I have some knowledge of the soya bean, because I can claim to be one of the first, if not the first, to introduce the soya bean to this country. The soya bean is a small round seed very much like the ordinary pea, and its great value is its high percentage of albuminous content. It contains 45 per cent. of albuminoids, whereas the percentage of albuminoids in copra is only 20 and in palm kernels only 18.
The soya beans are subject to a process of crushing, whereby the oil is expressed
from the bean. The beans are also subject to an extraction process by solvents. The resultant products being soya meal and soya oil. But the soya bean, unlike the palm kernel and copra, is imported into this country solely on account of its value as a feeding stuff, and not for the oil. That should be clear to the House when I say that the amount of oil extracted from 100 tons of soya beans is under 15 per cent., whereas in the case of 100 tons of palm kernels or copra 45 per cent. of the bulk is oil. If, therefore, quite apart from the feeding value point of view, we were to import the high oil-bearing seeds in place of the soya bean, it would mean that we should have a large volume of oil for which it would not be possible to find a ready market. Soya meal is the basis of all compound feeding cakes and meals. There is nothing which can take its place. If, as the Colonial Secretary would wish, we restricted or prohibited the importation of the soya bean, that would mean that the farmer would have to put up with a lower quality of compound feeding cakes and meal, because of the lower albuminous content of other meals which would take its place. I am sorry that the Minister of Agriculture is not here, because I am sure he would appreciate the point that I am making.

Sir P. CUNLIFFE-LISTER: I do not want to interrupt, but I spoke with the authority of the Ministry of Agriculture when I said that they regarded the comparative nutritive values as equal. I thought it desirable to make that statement. I knew it was a statement made by the Ministry of Agriculture two years ago, and I was at great pains to find out whether the Ministry of Agriculture still adhered to that view. They do adhere to that view, and I so stated to the House.

Sir F. SANDERSON: Of course I fully accept what my right hon. Friend says. But figures will speak. I am merely giving information which is beyond dispute when I say that soya meal contains 1 per cent. of oil and 45 per cent. of albuminoids, whereas copra cake contains 6 per cent. of oil and 20 per cent. of albuminoids, and palm kernels contain 5½ per cent. of oil and 18 per cent. of albuminoids. Members who represent agricultural districts will appreciate that with every delivery of feeding stuffs a
guarantee is given. It is compulsory to give that guarantee under the Fertilisers and Feeding-stuffs Act. The percentage of oil and albuminoids is guaranteed. It must be obvious that if a meal with a lower percentage of albuminoids is delivered it is an inferior article. With reference to the guarantee of oil and albuminoids, in point of fact the whole range of analysis is frequently given. That is to say the oil, albuminoids, carbohydrates, woody fibre and the nitrogen content.
There is no doubt that a result of this tax will be an increase in the cost of soya meal and cake to the British farmer, or alternatively be will have to content himself with a lower grade article. What will be its result from the industrial point of view? My right hon. Friend referred to linseed. The position with regard to soya beans will be exactly the same as has been the result of the imposition of a duty upon linseed, and perhaps I may venture to read one extract from my speech in the House with reference to linseed when discussing the Ottawa Agreements Bill of 31st October, 1932, in which I showed what would be the result of placing a 10 per cent. duty on foreign linseed coming into this country. I said:
What will be the result of the 10 per cent. import duty in this country? It will mean that the Continent, and in particular I would refer to Belgium and Holland, will be in a position to purchase linseed at the lowest world price, and having, as they have at their doors, a market for their linseed cakes, they will be able to dump their linseed oil on our shores which they did before the 10 per cent. duty was imposed. If we are to pay 10 per cent. above the world price for linseed, how is it possible for this industry to remain on our shores? Obviously, we shall become an importing nation for manufactured linseed oil and linseed cake. The linseed crushing industry which employs thousands of hands and has a considerable bearing upon many other industries will be severely handicapped."—[OFFICIAL REPORT, 31st October, 1932; col. 1491, Vol. 269.]
Anyone who has followed what has since taken place will bear me out when I say that every word I then expressed has proved to be true and is borne out by facts. If any proof of that were required, I would point out to the House what in fact has been the position. In 1932, before the 10 per cent. duty was imposed, 362,000 tons of linseed were imported
into this country. In 1933 the figure fell to 248,000 tons and in 1934 to 184,000 tons. If one requires any further proof of the deleterious effect of that duty on the industry, I would ask hon. Members to read the speech by the Chairman of the British Oil and Cake Mills, at the annual meeting held on 27th March last. I reiterate that the effect of the 10 per cent. duty on soya beans will be exactly parallel in every respect. He said:
The only dark spot has been the linseed crushing industry in this country.
He went on to say that an application was made for a duty and he referred to a point made by my right hon. Friend that if a tax upon soya beans has any serious effect upon the industry we shall be able to go to the Import Duties Advisory Committee and secure an import tax upon the products of the soya beans, namely, meal and oil. He continued:
I pointed out to you a year ago that the importation of linseed, which was 362,000 tons in 1932, had already fallen to 246,000 tons in 1933. It has further decreased during 1934 to the poor figure of 187,000 tons. That is to say, in two years half the trade has been lost. An application for the adjustment of Import Duties on linseed oil was made to the Import Duties Advisory Committee on the 5th March, 1934, through The National Seed Crushers' Association, an organisation which includes practically all the seed crushers in this country. For twelve months we have been urging rectification of the duty, but so far have been unable to get any satisfaction, or even to obtain a meeting. It seems almost incredible that in a business country like this it should be possible for an important industry to be allowed to suffer to this extent without any apparent attempt to save the position.
These are the words of the most eminent man in the industry. He controls some 70 per cent. of the whole of the seed-crushing mills in the United Kingdom, and he is, beside being chairman of British Oil and Cake Mills, a director of Unilevers, so that it will be appreciated that he is not speaking without very seriously and very carefully weighing every word he uses, and without full knowledge of the whole facts of the case.
I have only one more point I wish to make, namely that to which I referred in the early part of my speech, the effect which the duty will have on the shipping industry, which to a great extent is dependent on soya beans for return freights from China; it will have the effect of increasing
freights on goods shipped to China. As my right hon. Friend pointed out the tax will not be imposed until 1st August, and I am not without hope the Chancellor of the Exchequer will see his way to withdraw this duty.

9.32 p.m.

Mr. WHITE: I was very glad indeed to have heard the very interesting and informative speech from my right hon. Friend the Secretary of State far the Colonies, because the origin of this new duty and the reason for imposing it have hitherto been, at any rate so far as I am concerned, a complete mystery. At least, I know now what the object of placing the duty is, although I must go on further to say that, having heard his speech, I am unable to relate the picture which he drew to the practical reasons for the imposition of the tax. I will give some of the few reasons why I am unable to share his optimistic picture. Before I do so I should like, because I have been specially asked to do it, to refer to the complaint made as to the way this duty has been brought to the House.
Representations have been made from a very important trade association whose members are not only manufacturers, crushers, and millers but also distributors, that they feel very strongly indeed that if a tax of this kind is to be introduced, it should be done by means of the Import Duties Advisory Committee. Here is a proposition brought to the House that a duty is to be levied, and certain claims are made for it which, I think, are wholly problematic, and are not likely to be realised, but whether that is the case, it is quite clear that certain people are going to be injured. Of that there is no doubt whatever, and my friends feel that they ought to have had due notice of a tax of this kind being brought forward in order that they might at least be heard and their case might be stated, and all the facts taken into full consideration. It would be highly improper to suggest that the Chancellor of the Exchequer, or Parliament, should abandon the right of levying duties in the Budget. That is not a contention that can be made for a moment. Parliament should retain the right of levying or removing duties in the Budget. But I think in a case of this kind where there are obviously two sides to the question and many interests are involved, it would
be better that the matter should be dealt with by some machinery which would enable all these interests to be heard. My right hon. Friend made the assumption which I think is the main argument for imposing the tax, that the importation of soya beans directly competes with and injuriously affects the importation of palm kernels and ground nuts from West Africa. That is the main contention. It was not present to the minds of the Government when they omitted soya beans from the Import Duties, but it is the argument brought forward today.
I have examined carefully the series of figures from which my right hon. Friend has quoted, and, as far as ground nuts are concerned, there is no justification whatever for founding any argument upon them that the soya bean competes with ground nuts in any degree whatever. I doubt whether any scientific argument can be adduced from this set of figures at all. There are many other elements which have to be taken into account. There is the interplay of price, and there are other products such as rape seed which is to some extent interchangeable with ground nuts, soya beans and palm kernels. When it comes to the case of the palm kernels, if you choose your year you can prove anything you like from these figures. My right hon. Friend said that in 1919 the actual importation of soya beans was 62,000 tons and that this year it was 172,000 tons. Had he taken the next year 1920, he would have found that the actual importation then was only 7,000 tons.

Sir P. CUNLIFFE-LISTER: That is because I was so fair.

Mr. WHITE: If my right hon. Friend had only gone back a few years, however, he would have found an importation of over 400,000 tons.

Sir P. CUNLIFFE-LISTER: I took the mean.

Mr. WHITE: The conclusion to which I have come on looking through these figures is that there is no scientific argument of a statistical kind to be founded on them and even if there were, there is no argument on the qualitative basis, because palm kernels are not interchangeable in every respect with soya beans. My hon. Friend who spoke before me interested the House with an intellectual
survey of the albuminoids and carbohydrates and other factors in the chemical content of the soya bean but I have no wish to follow him in that field. There is, however, another important aspect of the matter which I do not think has been fully developed and which I think destroys the argument of my right hon. Friend. My hon. Friend behind me pointed out the great disparity between the oil content of soya beans and that of ground nuts. The soya bean contains 16 per cent. of oil and 80 per cent. of meal, the proportions in the case of the ground nuts being almost but not quite fifty-fifty. I would like to apply those facts to the argument as to the actual importation of soya beans in relation to the crushing industry in the current year.
Assuming that the crushers were to substitute the 170,000 tons of soya beans imported this year by a like amount of ground nuts they would then have to dispose of 73,000 tons of oil and 95,000 tons of cake or meal instead of 27,000 tons of oil and 136,000 tons of meal or cake. A man who is engaged in the crushing industry has to dispose of these products not in the proportions which he wishes, but in the proportions in which they are produced and according to the material in which he is dealing and the crushers would have upon their hands 46,000 tons of extra oil. If we are to have 46,000 additional tons of oil for which there is no market at the moment, what will be the result? My right hon. Friend attaches great importance to the West African problem and to getting not only a fair share of trade for West Africa but also a reasonable price for West African products. I hope that someone in the further course of this Debate will explain to me how the production of 46,000 additional tons of oil when the market does not want it, is going to help either the marketing or the price of West African products.
I pass from that point to carry the argument a stage further. Let us assume that the ground nut oil can be used to substitute the 27,000 tons of soya bean oil. Then the crusher would have to deal with 63,000 tons of ground nuts and 36,000 tons of meal. The result from, the point of view of the crushing industry would be that the total "crush" would
be reduced by 110,000 tons, and there would be a shortage of meal of the order of 100,000 tons. That would have to be made up and I should be glad to know how it is to be made up. I am advised that it would have to be made up by materials other than the West African materials and it is very doubtful whether it could be made up without further importation into this country. These are arguments which compel me to take a view very different from that of my right hon. Friend and they are arguments which ought to be met before the House is asked finally to pass this duty.
My right hon. Friend referred to a statement by the Liverpool Chamber of Commerce. I have nothing to say against that body; in fact, I am a member of it, but I was surprised to hear him quote the Chamber of Commerce as the authority for that statement. If I remember aright it was not the Chamber of Commerce itself but the West African trade section which made itself responsible for this statement or manifesto, and I may add that the statement is hotly contested by other sections of trade in Liverpool. I do not wish to take up time by dealing with any of the higher flights in my right hon. Friend's speech but, having listened to that speech with great attention, it leaves me of the same mind on this matter. I am still of the opinion that the arguments upon which the soya bean was left out of the general taxation scheme of the country are as intact to-day as they were when the system was introduced.

9.44 p.m.

Sir JOSEPH LAMB: I thank the Minister for the explanation which he has given of this tax and for the facts which he has presented in the House. Undoubtedly, there was some fear in the minds of agriculturists as to what the effect would be, but after the statement of my right hon. Friend I shall have no hesitation in supporting this Resolution. The two last speeches to which we have listened appear to proceed upon a wrong assumption. As I take it this is a duty of 10 per cent. and not the total exclusion of the soya bean. All the speeches to which we have listened have almost entirely assumed that the bean was going to be excluded from the market. That is not so. I have no doubt myself whether, if there is any increase at all in the price
of the bean by the imposition of the tax, there will be any question of it being excluded.

Sir F. SANDERSON: The 10 per cent. duty which was imposed on linseed has resulted in the amount of linseed imported in the last three years being exactly half of what it was. We maintain that the 10 per cent. tax upon soya beans will have precisely the same effect.

Sir J. LAMB: Apparently, the hon. Gentleman is stating a fact, and if it is a fact I do not deny it, but previously he gave us another fact, namely, that where there was a decrease in the price of cake it was not the farmer who got the advantage; it was other users of the oil. The last speaker said he objected to the duty being put on in this form. He thought that it should have been imposed through the Import Tariff Board. My impression is that that board is not available for the purpose. It is available for British manufacturers to make application, and I do not see how those interested in the growing of these other competitive seeds could go to the board for protection. One hon. Member has already given out a threat. He said undoubtedly the price would go up. I hope he is not going to make up his mind before the facts have shown themselves, and before they have shown what the rise is going to be. Let the increase come if it is necessary after it has been found to be necessary, but do not threaten the farmers with an increase before that. Individuals cannot live their lives by themselves. They have to live in relationship to others, and we have found the same thing entirely with regard to industries as with individuals. One industry cannot possibly live without reference to other industries. The remarks of my right hon. Friend as to the effect this is hoped to have on the trade of Lancashire has very great weight with me, and I think it will with agriculturists also. The industrialists of this country are the customers of the agriculturists. We are prepared to give fair play to them in return for the fair play we receive from them.

9.49 p.m.

Mr. LEONARD: It will not be necessary for me to occupy more than a few minutes as much I intended to say has been admirably stated by the speeches
made by the hon. Members for Ealing (Sir F. Sanderson) and East Birkenhead (Mr. G. White) whose attitude conforms to that I wish to adopt towards the Resolution. I am also indebted to the Secretary of State for the Colonies for the complete statement that he has made. It is not generally that we have such a comprehensive statement and I fully appreciate the point made. I was particularly interested in and appreciative of his statement to the effect that this action is not looked upon as something that will strengthen production, although he held out some hopes as to the production of this commodity in a number of the Colonies. The greatest hope was that in the most favourable place the results of the experiments were promising. It is right to be cautious in making his estimate as to what might apply in the future. While I am prepared to accept the attitude adopted by hon. Members opposite, representing farming interests, I did take note that when they were receiving the assurances of the Secretary for the Colonies they were very keen to get to know which was going to, be the cheapest of the commodities. They accepted the assurances with regard to the qualities of the commodities as foodstuffs, but they were as farmers eager to get the cheapest thing for their cattle.

Sir J. LAMB: We are prepared to produce as cheaply as possible for the benefit of the general public.

Mr. LEONARD: I am afraid the cows will have different views as to the qualities of the cheap products, but the feeding commodities themselves will show the results in the products. I want to deal with the question of co-operative societies. The Wholesale Co-operative. Society deal with the crushing of seed for the requirements of farmers. The products of the meal are supplied to 86 agricultural co-operative societies that have farmers as members. They are also in direct trading contact with individual farmers who find it an easy medium of interchange of their commodities, such as eggs, poultry, etc., in return for meal products. I am advised that investigations have been made as to the opinions of farmers, and any fears or hopes they may have as to the effect of the Budget Resolution. They are of opinion that the
farmers are keenly desirous of keeping close to the food product that is produced from the soya bean. They are also anxious as to the cost of that desirable commodity. To refer to the argument of the hon. Member for West Ealing (Sir F. Sanderson) with regard to linseed, in 1932 the importation was 360,000 tons, and in 1934, it dropped to 180,000 tons. The duty there has made it possible for continental crushers to enter into competition with us with the result indicated. In view of the fact that these points have definitely been referred to the farmers through the medium of the organisation to which I have referred I think the Chancellor of the Exchequer should reconsider this matter. I agree that the ideal is to apply the principle of Imperial preference, but that principle must not be allowed to injure the organisations already catering for local requirements and bear adversely on the farmer and the crushing interests.

9.54 p.m.

Brigadier-General NATION: I am the Member representing Hull to whom the right hon. Gentleman addressed the greater part of his remarks in his opening speech. The Member for West Ealing (Sir P. Sanderson) is not the Member for Hull. I, as representative of the city of Hull, have to regard this question of the duty on soya beans from an entirely different point of view from any other Member. We in Hull have, perhaps, the largest factory for crushing soya beans in the United Kingdom. We are employing hundreds of men not only in that factory but also in the carrying trade and on the docks. The point that troubles us is the effect it will have on employment. We have seen the example of the linseed duty. Hon. Members have already said that in the short space of two or three years there has been a fall of 50 per cent. in the import of foreign linseed to this country, and we are afraid that there will be a similar fall in the import of soya beans if this 10 per cent. duty is conferred. We also believe that the imposition of this duty will raise the price of the cake and will encourage the importation of foreign cattle feeds to this country. We in Hull import no less than two-thirds of the soya beans imported into this country. These beans are made into
cake in Hull. If we are to get an increased importation of foreign cake it will inevitably mean that there will be less manufactured in our city and more men will be put out of work.
Until to-night, when the right hon. Gentleman the Secretary of State for the Colonies made his statement, we were at a loss to find out what was the reason at the back of the Chancellor's mind when he proposed this duty. Several questions have been put in the House, but we have not been able to ascertain the reason. Now we know it is because the colonies wish to be given the opportunity of growing soya beans. We would have no objection to that whatever; in fact, I would gladly support the right hon. Gentleman in that proposal, provided always that the quantity can be furnished by the colonies at the prices we can afford to pay. Until it can be said with truth that the colonies can do that, it will be premature to impose a duty which will put many of our people out of work. If we could have the assurance that the colonies can do that, I would not be standing on my feet making this protest. We have suffered in the city which I represent a good deal through the general policy of the Government. [HON. MEMBERS: "Oh!"] I do not mean that in any deprecating sense. We do not complain at all, but where the rest of the country has benefited we have not benefited to the same extent in Hull. The tariff and anti-dumping policy has naturally hit the ports, for if there is less stuff coming in there is less work at the docks. Then again, the shipping policy and the attitude that has been taken up towards foreign and coloured sailors on our ships has put a lot of our own people out of work. The unfortunate postponement of the second appointed day has created further difficulties. Lastly, I am sorry to say we have had a very severe strike. All these things have created a good deal of feeling in Hull. We feel that a duty on soya beans will create further unemployment and hardship in the city.
I can assure the Government that the question of unemployment in our city transcends any other subject with which we have to deal. Compared with the question of unemployment, the India Bill, our foreign policy, and matters of that kind are of comparatively small
moment. There is only one thing before the people of Hull at the present time, and that is the question of getting more work. For that reason I am standing here to make this protest against this new imposition. The Chancellor of the Exchequer told the House when making his Budget speech that he expected to get £75,000 in a complete year from the duty. In the total revenue of the country £75,000 is an infinitesimal amount, but when the greater part of the hardship that the collecting of that small sum will impose falls to a large extent on one city, we have a right to make some protest. In view of that, I hope the Chancellor will give this matter further consideration. I do not know who has advised him in this matter, but I hope he will reconsider it and take off the duty al together, or, at any rate, put it on in steps and not impose it in one amount. I regret that I shall have to carry my opinion as far as possible unless we get some assurance that it will be further considered.

10.1 p.m.

Mr. TURTON: I approach this matter purely from the point of view of the incidence of this duty upon agriculture. I have no interest, financial or mental, in seed importing or crushing. I believe that the business men of both Liverpool and Hull are not entirely philanthropists. In justice to the importers of soya beans, however, I should say that I was interested in the speech made by the hon. Member for the West Derby Division of Liverpool (Sir J. Sandeman Allen) a fortnight ago when he said that, although the price of the raw product had fallen by 9 per cent., the price of soya bean cake was the same as in the previous year. That has not been the experience of my constituents, and I took it upon myself to find out the authenticity of those figures. My right hon. Friend the Colonial Secretary has repeated them to-day, although he has given them with greater detail, and has also told us the source of the figures. The source are statistics compiled by a Mr. Fehr. I have inquired from the sellers of soya bean cake their prices last year and this year, and I find that the average dropped from £7 to £6 15s. I am told by the importers that it is impossible in their view for Mr. Fehr to have had access to the accounts from which the proper average could be struck. I give
that to the House for what it is worth, but I think it is only in justice that one should point out that the farmers have in fact been given 5s. of the 11s. that the oil crushers received.
I should like to turn to the position of the agriculturists in regard to soya bean cake, in which I am more interested, and of which I have greater knowledge. My constituents use it extensively for the fattening of both pigs and beef, and in their experience the soya bean cake has considerable advantage in nutritive value over the ground nut and palm kernel. The Ministry of Agriculture officials, I understand, take a different view. Still, the centres at Patrington and Amesbury which are conducted by the Ministry of Agriculture have not been very successful; perhaps because they take a theoretical as opposed to the practical view. If you ground nuts as sold at £5 and soya beans at £6 13s., it is quite clear that there must be some greater advantage in soya beans which makes the farmers pay £1 13s. more. Of course, farmers also are not philanthropists. We have had some experience of these different foods, and we have come to the conclusion that soya beans are a far more desirable food. If that be so, the effect of this 10 per cent. duty will be the same as that about which the hon. Baronet the Member for Ealing (Sir F. Sanderson) spoke in regard to the linseed duty. It will mean that farmers will have to pay more and that less will come in, and it will be another burden on the stock-raising industry.
I have taken a peculiar and special interest in this Debate, because two years ago in February, 1932, I moved an Amendment to the Import Duties Bill asking that soya beans should be put on the Free List, and I am very glad that the Chancellor of the Exchequer is here in his place to-day. I put three arguments forward, and, after I had spoken, the Chancellor of the Exchequer got up and said that, in view of the reasonableness of my argument, he was prepared to accept the Amendment. I hope that the House will allow me to remind them what my three arguments were. My first was that when you had not put a duty on the finished product, meat, of the stock raiser, who thought he ought to have that duty, it would be very unfair to put it on his raw product, soya beans. My
>
second argument was that soya beans could not be grown to any degree in our Empire. And from that I concluded that we have some ground for asking that this raw product should be exempted from the 10 per cent. duty. I pointed out also the low effect of the price of beef at that time. May I ask the Chancellor in what way have those arguments been changed in the course of two years?
The Colonial Secretary has told us today that he does not for one moment argue that soya beans can be grown commercially in the Colonies. His argument is entirely protective. It is to encourage the ground nut and the palm kernel; he quite properly wishes to encourage these industries. The day I was speaking the price of beef was 43s. 3d. a cwt.; to-day it is 38s. a cwt. The farmer still has not got protection for his finished product. Even with the 5s. subsidy, he is getting less to-day than he got at the time when the Chancellor of the Exchequer exempted this raw product. For that reason, I would ask that we should not have this duty put on our industry. The Colonial Secretary is, as he admitted, by nature an optimist. He is also by office a colonist, and I would not for one moment fail to pay tribute to his enthusiasm for our great Colonial Empire. But let us not forget the Ottawa principle, that we must regard our own industry first, the Empire second, and last the foreign countries.
I do not ask for the exemption of soya beans in the interest of any foreign country, but purely of our own industry, agriculture. It is quite proper that the Colonies should have some advantage. They have got it already in the difference in price between soya beans and ground nuts. But, further, since the Chancellor introduced his Budget there has been a great change in this important question. The price of silver, owing to the machinations of the Americans, has risen to 3s. an ounce. As a result the product of Manchukuo and China has risen in value. Soya bean raw material is coming in to-day at a higher price because of that rise of silver. The very 10 per cent. which the Chancellor of the Exchequer asked for has been put on, not by him, but by Mr. Roosevelt in America; and, if we pass this Resolution, we are going to put on a super-tax, another 10 per cent. As a result of the rise in silver
soya bean cake has risen by 5s. a ton in the last fortnight. It has risen from £6 15s. to £7. If this Resolution is passed, it will be more than £7 per ton. It is, I know, in the view of some hon. Members, not a large amount, 5s. a ton on the cost of foodstuff; but when you are facing bankruptcy, when you are not producing your pigs and beef at a profit, it is an extra burden which is driving men off the land. The Chancellor of the Exchequer will remember that it was the last straw which broke the camel's back. Let him beware lest this duty break the broad but bowed back of the livestock farmer.

10.11 p.m.

Captain HEILGERS: I am sorry not to find myself in complete agreement with my fellow agriculturists in this matter, but whatever doubts I might have had were dispelled when I heard the speech of the right hon. Gentleman who moved the Resolution. I cannot help feeling that in this case Imperial considerations must come first, and the wonderful effects of the quotas which he detailed to us must persuade us to view this duty in the most favourable light possible. Looking at it from the agricultural point of view, I want to make this point. I am a large user of soya bean meal myself, and it would not be such a very serious blow to agriculture if something did go wrong as regards soya bean meal, because having such a high albuminoid content the bean can only be used in a limited amount. The use of more than a certain percentage would be dangerous to the animal you were feeding. Therefore, I do not think that agriculture is going to suffer to the extent that has been pointed out in one or two quarters to-night. I do not think that the price need go up.
I was very surprised to hear what the hon. Baronet the Member for Ealing (Sir F. Sanderson) prophesied, that the price would go up. It is undoubtedly true, as the right hon. Gentleman said, that the fall in price of soya beans has not been passed on. It went down early this spring, I believe, possibly when this duty was envisaged, and it has now gone up slightly, I think, perhaps, with the idea in mind that it will not be raised when this duty comes on. Though awful things were prophesied as regards linseed, and we have heard of the fall in imports, which I agree is a serious thing
for Hull and the other ports, yet looking at it purely from the agricultural point of view, possibly because of the oil in the linseed, there has not been a rise in the price of feedings-stuffs to agriculturists. Looking through my books the other day I find the price of linseed cake to-day is less than when the duty was put on. I will conclude by endorsing what was said by the hon. Member for Stone (Sir J. Lamb), that we who are agriculturists must look further a field. We must realise that if this is going to bring prosperity to some parts of our Empire and they can buy more Lancashire cotton that will give us the key to prosperity in agriculture.

10.15 p.m.

Lieut.-Colonel SANDEMAN ALLEN: I was interested to hear the hon. Member for East Birkenhead (Mr. White) standing up for the interests of farming, and I want to stand up for the interests of West Africa. East and West do occasionally agree to differ. His arguments were most interesting. It was a case of "Heads I win and tails you lose," because he championed the high prices for oil but stood very strongly against high prices for the beans. What was good for the goose was obviously not good for the gander in that case. Among other things he tried to make the point that the Liverpool Chamber of Commerce have not advocated this tax. They have advocated it most strongly. To suggest that it was only the West African section of the chamber which advocated it is to take away the responsibility of the whole chamber for what one section or committee has done. The chamber endorsed the recommendations of the West African section. He might just as well say that this House is not responsible for what one of its Committees does. The chamber stands very strongly for the maintenance of this tax.
The hon. Member for Ealing (Sir F. Sanderson) made a point about shipping, and said it would be detrimental to British shipping if we stopped bringing soya beans from the Far East. I would like to ask him how many soya beans are carried in British ships and how many in Japanese ships? I can assure him that if some of the trade was diverted into palm kernels and nuts from West Africa much more carrying would be done in British than in Japanese
ships. There is nothing much more that I can add without repeating the arguments already put forward, but I do want to endorse the view that if we can divert any of this trade to our Colonies we shall increase the purchasing power of the natives there and they will buy more British goods. I have been fortunate enough to visit parts of Africa and I find that the native is very discriminating. He likes to buy British goods when he can afford to do so, but when he cannot sell his own products and has very little money he is forced into the cheaper market and buys Japanese goods. The more we can improve the purchasing power of those who are in our own Empire the more employment we shall provide for the British working man.

10.19 p.m.

Mr. LOGAN: I have been very much interested by the Debate to-night, more especially in the speeches of the hon. Member for East Birkenhead (Mr. White) and my hon. Friend opposite. About 18 months ago I introduced a deputation of the West African trade to the Chamber of Commerce, and I had to produce figures and a careful analysis was made of them. I am not concerned about the soya bean or the palm kernel except to the extent that I know that less West African produce is coming into the port of Liverpool, and when I remember the great carrying trade that used to be done with the West coast of Africa and the great amount of revenue that Lancashire received from the East and West coasts of Africa I think that a market which was a good market in the past ought to be maintained as a good market. This is not a matter that concerns the Labour party from the point of view of whether palm kernels or soya beans are the better. We are concerned about what will give work to our people and make our ports prosperous. There is no difference in that respect between the port of Liverpool, the port of Hull or any other port.
I want to be honest in giving opinions in this House. There is another competitor in the market. When the Colonial Secretary spoke this afternoon he did not mention another factor in regard to the distribution of the goods of the Empire, one which is of great moment to those in the business. Norwegian shipping is engaged
in carrying whale oil, which has had a very detrimental effect upon our trade with the West coast of Africa. I have received a letter from Liverpool to-day, and the Chancellor of the Exchequer may be pleased to know that those engaged in West African industries look upon all this as a domestic matter. They say that it is a question of opinion, and that the value of various oils must be determined by the trade. Those who are engaged in this trade in the City of Liverpool are afraid to give any expression of opinion, because they think that the dispute ought to be settled between the parties concerned.
From the point of view of revenue, a wonderful opportunity was afforded to the Chancellor of the Exchequer. He has had many critics and I have criticised him on minor points, but in the interests of shipping and the amount of production that went out of Lancashire, some protection ought to be given to the West coast trade. I believe there are over a million people there now who are likely to go into the bush because of the decrease in trade, due to the foreign trade in oil. We might have been able to revive the carrying trade to the Port of Liverpool and other ports in this country, and bring back a great deal of our shipping business, which might have been beneficial all round. To gain trade in one part while you lose trade in another, is not good business, and seems idiotic. The maintenance of our West African trade should be worth something to this country. I would draw the attention of the Chancellor of the Exchequer to the figures that were produced through the Liverpool Chamber of Commerce, because they indicate definitely that we are losing the trade of the West coast of Africa. The cotton mills of Lancashire derive a great deal from the West coast of Africa. Speaking to the people round about Leyland, Preston, Blackburn and Burnley, I was informed that they had lost a great deal of that trade. Merchants in Liverpool used to make a good thing out of it, but on account of the dearth and their not getting goods from West Africa, there has been no question of buying by the natives who are out there. That is a market which in my opinion ought to be resuscitated and cultivated. It used to bring great prosperity to the port of Liverpool, and I am convinced that, if
the West African trade can be protected, it will be to the advantage of the whole nation.
This is not a question of a rise of 5s. or 10s. for one man; it is a national matter; the whole Empire is concerned in devising some means of improving our trade. I think it lies in the direction of our home markets being protected and seeing that we get the best out of them. I do not think that this 10 per cent. duty will achieve what the Chancellor expects; I do not think it gives that protection which is essential when you have another product, not under British control, capturing markets which we are not able to control, and which we are not attempting to control. I think that if the Chancellor would pay a little attention to that point of view it would be beneficial. Liverpool is not doing too well, and if by this method the condition of Liverpool and our other ports can be improved, I shall be pleased to see it. The soya bean was not the difficulty when the case was presented 12 months ago on behalf of the Chamber of Commerce of Liverpool. The difficulty was a form of competition which was hitting Liverpool very severely, not the soya bean trade, but the trade in oil, which was of very great benefit to the city of Liverpool. While the soya bean may relieve the situation, the Chancellor might pay some attention to the question of oil which is not being carried in British ships.

10.28 p.m.

Sir ERNEST SHEPPERSON: I approach this matter as an agriculturist, concerned for the interest of agriculture. I would like to express my gratitude, as others have done, for the frank and generous statement of the Colonial Secretary. The concern of agriculture with regard to this tax is simply a fear that there may be an increase in the price of a feeding stuff which has a large albumoid content. Possibly it may not be generally know throughout the House that a balanced ration of foods must contain a certain definite proportion of albuminoids to carbohydrates. A large proportion of the feeding stuffs which are easily obtained are rich in carbohydrates but poor in albuminoids. The soya bean differs from these other food products in being rich in albuminoids, and therefore soya meal, rich in albuminoids, is essential for mixing with other carbohydrate
foods. It is for that reason that agriculture is concerned in this matter, and I have simply risen to bring that point of view to the notice of the Secretary of State for the Colonies.

10.30 p.m.

Major PROCTER: I am sure that the whole House, and especially hon. Members from Lancashire, listened with great pleasure to the announcement of the Secretary of State for the Colonies of the result of the policy which the Government put into effect concerning the quotas in respect of foreign goods entering our Colonies. Lancashire has gained 68,000,000 yards of cotton goods, and therefore it is only right that we should do all that is possible for the British Colonies. I am certain that the duty of 10 per cent. on soya beans will at least help the great market for Lancashire goods. Manchukuo, from which the soya bean comes, buys no goods at all from Lancashire. [An HON. MEMBER: "If not, why not?"] The reason is that its great protector who supplies Japanese goods pays very low wages, and the prices obtained from soya beans help the Imperialistic enterprise which is now taking place. West Africa has been a great market for Lancashire goods, but I am sorry to say to the Secretary of State for the Colonies that the year 1934 was a most disastrous year from the point of view of West African trade. The price of oil seeds has fallen by 40 per cent., and the average price of West African products has fallen by 70 per cent. There-fore, if the West African native does not receive money for his goods, and if his income falls by 70 per cent. his purchasing power in respect of Lancashire goods must fall in a corresponding degree.
The result is not only reflected in our Lancashire cotton areas, but it is seen in Liverpool, which is my native city. I remember as a boy seeing those great lumbering horses going along the dock road in Liverpool with great cargoes from West Africa. Now, as far as those docks are concerned6, it seems as if there has been decay, and the trade of Liverpool has been so badly hit by the policy by running our Colonies on the Dr. Barnardo principle of the ever open door for the other nations of the world, that over 40 firms in Liverpool who were engaged in the West African trade have had to go bankrupt. Whereas the soya bean hitherto has paid on duty in this
country, palm kernels from West Africa have had to pay an export duty of, say, from 10s. to £1 a ton. Therefore, the policy of the Government hitherto has been to give the Manchukuo soya bean ingress to the British market, and to penalise the products of West Africa. I hope the Government will consider whether this 10 per cent. duty is really sufficient. The Colonial Secretary said that the price of the raw material, the soya bean, had fallen by 9 per cent., but the consumer had received no advantage whatever. Therefore, if we put a duty of 10 per cent. on the soya bean the manufacturers are still able to get along with that 10 per cent., having 9 per cent. in hand, and all that it will mean will be an increase in the revenue and not the forwarding of that policy which we on this side of the House desire, namely, to divert trade from foreign countries and to bring our Colonies and this country into closer co-operation, so that the people in this country and in West Africa and other Colonies will receive preference or benefit from that inter-Imperial trade. It is no good saying, as one hon. Member said, that because soya beans are not produced in the British Empire we should not put a duty on them. We must recognise that the soya bean is a serious competitor with a Colonial product, and it is our duty as trustees to assist the policy of the Government, which has excluded Japanese textile goods from the Colonies, and say to the people concerned: "We will do all that we can to see that the British market is retained for Colonial products." We shall in that way help our great Colonial Empire and Lancashire trade.

10.38 p.m.

Mr. CHRISTIE: The opposition to the duty is based on the supposition that the duty of 10 per cent. on linseed has diminished the importation of linseed by one-half. Nobody will say that it has decreased the amount of cake that has been consumed by the British farmers. All that has happened is that the farmers are better educated now and they realise that there are other proteins besides linseed cake which they can obtain at a more reasonable price. The reduction in the amount of linseed cake used is due to the fact that the farmers have turned to other sources of protein which are
cheaper. I welcome this duty because it seems to me that the Government are prepared to assist our Colonies by making it more difficult for one part of China to send their products here. Having taken that initial step perhaps they will go a little further and do something to make it more difficult for Chinese eggs to come in, not for the benefit of the Colonies but for the benefit

of the people at home. This duty is a very promising sign and I hope the Colonial Secretary will go on with his good work and induce the Chancellor of the Exchequer to go a step further.

Question put, "That this House doth agree with the Committee in the said Resolution."

The House divided: Ayes, 157; Noes, 44.

Division No. 163.]
AYES.
[10.40 p.m.


Acland-Troyte, Lieut.-Colonel
Gower, Sir Robert
O'Donovan, Dr. William James


Albery, Irving James
Greene, William P. C.
O'Neill, Rt. Hon. Sir Hugh


Allen, Lt.-Col. J. Sandeman (B'k'nh'd)
Grenfell, E. C. (City of London)
Ormsby-Gore, Rt. Hon. William G. A.


Applin, Lieut.-Col. Reginald V. K.
Grigg, Sir Edward
Pearson, William G.


Aske, Sir Robert William
Grimston, R. V.
Penny, Sir George


Astor, Maj. Hn. John J. (Kent, Dover)
Gritten, W. G. Howard
Percy, Lord Eustace


Atholl, Duchess of
Gunston, Captain D. W.
Perkins, Walter R. D.


Balfour, George (Hempstead)
Hamilton, Sir George (Ilford)
Powell, Lieut.-Col. Evelyn G. H.


Balfour, Capt. Harold (I. of Thanet)
Hammersley, Samuel S.
Pownall, Sir Assheton


Barclay-Harvey, C. M.
Hanbury, Cecil
Procter, Major Henry Adam


Beaumont, Hon. R. E. B. (Portsm'th, C.)
Hannon, Patrick Joseph Henry
Ramsay, T. B. W. (Western Isles)


Birchall, Major Sir John Dearman
Harbord, Arthur
Ramsbotham, Herwald


Blindell, James
Harvey, George (Lambeth, Kenningt'n)
Ramsden, Sir Eugene


Boulton, W. W.
Heilgers, Captain F. F. A.
Rankin, Robert


Bowyer, Capt. Sir George E. W.
Hills, Major Rt. Hon. John Waller
Reid, James S. C. (Stirling)


Boyce, H. Leslie
Hore-Belisha, Leslie
Reid, William Allan (Derby)


Braithwaite, J. G.(Hillsborough)
Howard, Tom Forrest
Remer, John R.


Broadbent, Colonel John
Hewitt, Dr. Alfred B.
Rickards, George William


Brown, Brig. -Gen. H. C. (Berks., Newb'y)
Hudson, Capt. A. U. M. (Hackney, N.)
Roberts, Sir Samuel (Ecclesall)


Browne, Captain A. C.
Hudson, Robert Spear (Southport)
Ropner, Colonel L.


Buchan-Hepburn, P. G. T.
Hume, Sir George Hopwood
Rosbotham, Sir Thomas


Burghley Lord
Jamieson, Douglas
Ross, Ronald D.


Burgin Dr. Edward Leslie
Jennings, Roland
Ross Taylor, Walter (Woodbridge)


Cadogan, Hon. Edward
Jones, Lewis (Swansea, West)
Rutherford, John (Edmonton)


Castlereagh, Viscount
Ker, J. Campbell
Rutherford, Sir John Hugo (Liverp'l)


Chamberlain, Rt. Hon. N. (Edgbaston)
Kerr, Hamilton W.
Samuel, M. R. A. (W'ds'wth, Putney)


Chorlton, Alan Ernest Leofric
Lamb, Sir Joseph Quinton
Smiles, Lieut.-Col. Sir Walter D.


Christie, James Archibald
Law, Sir Alfred
Smith, Sir J. Walker- (Barrow-in-F.)


Colfox, Major William Philip
Leech, Dr. J.
Southby, Commander Archibald R. J.


Conant, R. J. E.
Leighton, Major B. E. P.
Spears, Brigadier-General Edward L.


Cook, Thomas A.
Liddall, Walter S.
Spencer, Captain Richard A.


Cooper, A. Duff
Lister, Rt. Hon. Sir Philip Cunliffe-
Spender-Clay, Rt. Hon. Herbert H.


Cranborne, Viscount
Llewellin, Major John J.
Stevenson, James


Crooke, J. Smedley
Lloyd, Geoffrey
Storey, Samuel


Crookshank, Col. C. de Windt (Bootle)
Lockwood, John C. (Hackney, C.)
Stourton, Hon. John J.


Crookshank, Capt. H. C. (Gainsb'ro)
Lovat-Fraser. James Alexander
Strauss, Edward A.


Croom-Johnson, R. P.
Lumley, Captain Lawrence R.
Strickland, Captain W. F.


Cruddas, Lieut.-Colonel Bernard
Lyons, Abraham Montagu
Sugden, Sir Wilfrid Hart


Davies, Maj. Geo. F. (Somerset, Yeovil)
MacAndrew, Lieut.-Col. C. G. (Partick)
Sutcliffe, Harold


Denville, Alfred
MacAndrew, Capt. J. O. (Ayr)
Thompson, Sir Luke


Dickle, John P.
McCorquodale, M. S.
Todd, Lt.-Col. A. J. K. (B'wick-on-T.)


Dugdale, Captain Thomas Llonel
Macdonald, Sir Murdoch (Inverness)
Wallace, Captain D. E. (Hornsey)


Eastwood, John Francis
Macmillan, Maurice Harold
Wallace, Sir John (Dunfermline)


Edge, Sir William
Margesson, Capt. Rt. Hon. H. D. R.
Ward, Irene Mary Bewick (Wallsend)


Elliot, Rt. Hon. Walter
Marsden, Commander Arthur
Wedderburn, Henry James Scrymgeour


Entwistle, Cyril Fullard
Martin, Thomas B.
Williams, Herbert G. (Croydon, S.)


Essenhigh, Reginald Clare
Mayhew, Lieut.-Colonel John
Windsor-Clive, Lieut.-Colonel George


Fleming, Edward Lascelies
Mills, Major J. D. (New Forest)
Winterton, Rt. Hon. Earl


Fox, Sir Gifford
Mitchell, Sir W. Lane (Streatham)
Womersley, Sir Walter


Fraser, Captain Sir Ian
Monsell, Rt. Hon. Sir B. Eyres



Gillett, Sir George Masterman
Morgan, Robert H.
TELLERS FOR THE AYES—


Gledhill, Gilbert
Morris-Jones, Dr. J. H. (Denbigh)
Sir Victor Warrender and Captain


Goff, Sir Park
Muirhead, Lieut.-Colonel A. J.
Hope.


Goodman, Colonel Albert W.
Nunn, William



NOES.


Addison, Rt. Hon. Dr. Christopher
Daggar, George
Grundy, Thomas W.


Attlee, Clement Richard
Davies, David L. (Pontypridd)
Hall, George H. (Merthyr Tydvil)


Banfield, John William
Davies, Rhys John (Westhoughton)
Harris, Sir Percy


Batey, Joseph
Edwards, Charles
Holdsworth, Herbert


Brown, C. W. E. (Notts., Mansfield)
Foot, Dingle (Dundee)
Janner, Barnett


Carver, Major William H.
Gardner, Benjamin Walter
Jenkins, Sir William


Cocks, Frederick Seymour
Greenwood, Rt. Hon. Arthur
John, William


Curry, A. C.
Grenfell, David Rees (Glamorgan)
Jones, Morgan (Caerphilly)


Lansbury, Rt. Hon. George
Nation, Brigadier General J. J. H.
White, Henry Graham


Lawson, John James
Parkinson, John Allen
Williams, David (Swansea, East)


Leonard, William
Pickering, Ernest H.
Williams, Edward John (Ogmore)


Logan, David Gilbert
Sanderson, Sir Frank Barnard
Williams, Thomas (York, Don Valley)


Maclay, Hon. Joseph Paton
Smith, Tom (Normanton)



Mason, David M. (Edinburgh, E.)
Tinker, John Joseph
TELLERS FOR THE NOES.—


Milner, Major James
West, F. R.
Mr. Walter Rea and Mr. Harcourt




Johnstone,


Question put, and agreed to.

Motion made, and Question proposed, "That this House doth agree with the Committee in the said Resolution."

10.48 p.m.

Mr. HERBERT WILLIAMS: I want to congratulate the Chancellor of the Exchequer on this Budget Resolution. From the widely drawn text we cannot appreciate quite the exact significance of it. We can do that only when the Finance Bill has been printed and we see the Clause. I was one of those who took some part, when the Import Duties Bill was passing through Parliament, in supporting and in criticising in a friendly way some of its provisions. The valuation Clause in the Import Duties Act contemplates valuation in a variety of ways. The primary valuation is based on the assmption that the goods are to be valued for import duty purposes at the value at which they were sold to the importer. I think it is manifest to all of us, whether we happen to be Protectionists or Free Traders, that from time to time goods enter this country declared at values which have not much relation to the cost of production in the country of origin, and have not much relation to the cost at which similar goods are produced in this country. In other words, dumping is, in fact, taking place; and I hope that this Clause, when we see it in the Finance Bill, will be of such a character that importers will be compelled to pay duty on a value which is the real sale value of the goods—in other words, on an honesty basis. I have no doubt that in a number of cases unfair competition has taken place in this country owing to the fact that goods come in at a value which is not really the true value, and that the duty of 10, 15 or 33⅓ per cent. is levied on a value which is not the real value. That means that the effective duty is not paid. When duties are specific, based on some unit of quantity, this problem does not arise. I would like to ask the Chancellor of the Exchequer one or two questions on this, because under the Import Duties Act
duties now levied by value can be changed, I think, to duties by quantity.
Therefore, though this Resolution relates only to duties by value, we cannot entirely shut out of consideration duties levied by quantity, whether on weight, length, or any other unitary standard. It is evident that specific duties by quantity are a more effective instrument for dealing with what is called dumping, that is, selling in a foreign country at a cost lower than the goods are sold in the country of production. On the other hand, ad valorem duties have certain advantages. I am one of those who take the view that mixed duties, partly by value and partly by quantity, have certain outstanding advantages. Here we are providing for some change in the system of valuation, but what it is I do not know. That is the disability under which I am labouring at the moment. But some of the goods concerned will be imported from foreign countries, and some exactly identical goods will be imported from Empire countries. Ever since I took an interest in this subject I have been a fervent Imperialist, but I have never taken the view that this country should not be protected, where necessary, against competition from Empire countries. Lord Beaverbrook, for whom I have the greatest personal respect, calls himself an Empire Free Trader. I call myself a Preferentialist. There are cases in which if I had had my way the Import Duties Act would have provided duties on Empire products instead of allowing all Empire products in duty free. In two or three years' time that problem has got to be reviewed, and I am very definitely of the opinion that we ought not to have Empire Free Trade, but Imperial Preference.
In the meantime we shall have goods coming in from foreign countries, to which this valuation Clause will apply. Presumably it will apply equally to goods from Empire countries, though in fact they do not pay the ad valorem duty. If goods are of a kind liable to ad valorem
duty they pay it if they come in from foreign countries but they do not pay it if they come from an Empire country. I hope the principles of valuation under this Clause will apply equally to foreign and Empire goods. I can think of goods now coming from an Empire country which are competing with goods produced in the constituency of the hon. Member for East Edinburgh (Mr. D. Mason) at prices which are totally unfair to the employment of labour in this country. If I had my way I would impose a duty on these Empire goods. I want to know what is their fair valuation as compared with British goods, and I hope we shall have made clear not the valuation at which the transaction takes place but the fair valuation in relation to the production of similar goods in this country, having regard to the fact that there is not one of us who does not want to see the British workman paid the highest wage that the industry will stand. The valuation of the goods ought to be related to the conditions in this country and not to the conditions in a country overseas, say an Eastern country, whether it happens to be an Empire country or a foreign country. Let us know the truth about our import trade.
I pass to the case of a commodity which is liable to a specific duty but which I hope before long will be liable to an ad valorem duty. I refer to cinema films. At the moment they pay a duty of 5d. a foot of the standard width, if they are negatives, and 1d. if they are positives-that is the film which goes through the apparatus in the cinema theatre. These films are valued at the cost of taking the photograph and developing the film. Not a penny piece is charged in that valuation in respect of the cost of artists and so forth. The film comes in here at a valuation representing merely the mechanical cost of the photograph. It does not include a penny of the cost of the pageant or story which has been filmed. I look forward to the day when the Chancellor of the Exchequer will change all that and let us have an ad valorem duty on the real value. Last year we imported £320,000 worth of films which had pictures on them. That is the amount of the retained imposts and the duty collected was £150,000. There, you will say, is a duty of nearly 50 per cent. But a friend of
mine who happens to be a distinguished economist and who is now successful in the film industry read a paper on this subject before the Royal Statistical Society and he came to the conclusion that the films imported from abroad were let out to cinemas in this country at sums which produced about £6,000,000 for the people abroad. But the valuation in the Customs returns here is only about £320,000.
True, this is a specific duty but it may before long be an ad valorem duty and that is why I am raising the point now. A film will come in here and it will be declared to be worth £1,000. The renter gets hold of it and lets it out and ultimately raises £100,000 on it. The renter may be and frequently is the agent of the foreign producer. Whether the renter pays Income Tax on the profits represented by a rental of £100,000, nobody knows. It is conceivable that an American producer, say, has charged £90,000 for something which is entered in our Customs return at £100,000. It escapes Income Tax in this country and it escapes any effective import duty. If we had an ad valorem duty such as, I hope, the Chancellor will agree to, the value can be used later for the purpose of the assessment of Income Tax and what the importer misses then on Customs duty he will pay later on in Income Tax. I see no reason why we should pay tribute to the extent of nearly £6,000,000 to foreign producers of films while those people do not pay a penny of Income Tax, as far as I can find out, on these profits. I think it is a first class scandal. I know it is not easy to deal with this matter, and I am not criticising the Chancellor, but I think it is a problem which must be solved. I do not see why the production of labour in this country ultimately reflected in the profits of renters and exhibitors should pay Income Tax in full when in the case of foreign films the bulk of the value escapes Income Tax. That seems to me entirely indefensible.
I do not know exactly what this Clause is going to be, and I hope the Chancellor of the Exchequer will tell us. I hope it will deal with dumping and will enable us to know far more about the nature of imports into this country than we do at present. Our information is very inadequate, and I want to have fuller information. I want to see an instrument
which later on will enable my right hon. Friend to deal with some of these problems. I am going to ask my right hon. Friend to give more indication of what he has in his mind. I know from certain conversations I have had with people that he has had a great many representations on valuation. Many people think particularly of our protectionist policy, and I am certain hon. Gentlemen on the Liberal benches, whether they agree with it or not, whether they are free traders, as I imagine they all are or not, will desire that so long as we are running a protectionist policy, duty should be paid on a fair valution. I believe it is one of the most important Resolutions in the Budget from many points of view. It has an important bearing on the future well being and employment of our people. I shall be grateful if my right hon. Friend will give some indication of his precise intentions.

11.2 p.m.

Mr. MORGAN JONES: I merely rise to say, on behalf of my hon. Friends on this side of the House, that we agree that the words on the Order Paper only contain the general proposition. It may be a sound or an unsound proposition, but I do not wish to discuss that now. We shall wait and see the principle enunciated in this Resolution applied in the Finance Bill before we arrive at our final conclusions.

11.3 p.m.

Mr. H. JOHNSTONE: I hope the Chancellor of the Exchequer will not pay too much attention to the hon. Member for South Croydon (Mr. H. Williams).

Mr. H. WILLIAMS: Why not?

Mr. JOHNSTONE: I will tell you why not. The argument which the hon. Gentleman put forward was, so far as I can gather, that the basis on which a tax on imported goods should be levied in this country was that the value of any goods should be calculated in accordance with goods of a similar character produced in this country. But in fact a genuine valuation is not, as he seems to think, the amount of cost or labour put into goods, but what you can get for them. If the hon. Gentleman has ever tried to sell anything which he thought was valuable, he will know that that is
true. The value of goods produced either in this country or coming into it from elsewhere is not the amount of their cost, but the amount the purchaser will give for them.

Mr. H. WILLIAMS: Do I understand that the hon. Member approves of the principle whereby foreigners sell in this country at pries lower than prices at which they sell in their own country?

Mr. JOHNSTONE: Yes, certainly I do, and if the hon. Gentleman has followed the course of protectionist and free trade polemics in the last 20 years he will know that is the view held by those holding free trade views. In fact, the benefit to the country as a whole in obtaining goods cheaply is greater than buying them dearly even though they are bought at home. It would be irrelevant and out of order to go into the general argument whether imports from foreign countries bought cheaply were to the advantage of the country as a whole or not, but the only true valuation must obviously be the price at which the purchaser is willing to give, and not the price which the seller would demand after calculating the whole of the costs. I have little doubt that the Chancellor, when he produces the Clause in the Finance Bill, will not take the basis suggested by the hon. Member for South Croydon. If he did, any kind of goods, however desirable their entry was—and even the hon. Member will admit that there are certain classes of goods the entry of which from abroad is desirable which are dutiable at this moment—would pay on the basis of similar goods produced in this country at a necessarily high cost. If that be the view he holds, that would be the result. Let us imagine that there are in this country individuals or companies endeavouring to produce a certain class of goods and not succeeding in producing them at an economic price. The hon. Member would then contend that the price of goods entering this country for duty should be the same as the price of those goods produced in this country uneconomically and inefficiently.

Mr. H. WILLIAMS: Would the hon. Gentleman apply that doctrine if the higher cost was due only to the fact that higher wages were paid in this country than in the competing foreign country?

Mr. JOHNSTONE: Certainly. There is no reason, if we take the case of Ford
cars, why high wages are necessarily productive of high costs.

Mr. WILLIAMS: If the only cause of the higher cost was the higher wages paid in this country, would the hon. Gentleman still apply his principle?

Mr. JOHNSTONE: The hon. Member puts me in what he thinks is a dilemma, but there is no dilemma, because there is, as far as my observation goes, no proved case in which wages have been the sole cause of high costs

Mr. WILLIAMS: Oh.

Mr. JOHNSTONE: The hon. Gentleman makes an exclamation, but I notice that he does not give me an example. We on this side will be delighted to examine any example he gives. Even if he could produce such an example—and he makes no attempt to do so—I should still hold that it was to the advantage of the country as a whole to import the goods, provided persons here wished to import them and were willing to pay for them. But that is not the point of this Resolution. The point of it is the question of valuation, and I desire to ask the Chancellor of the Exchequer not to pay any attention to the contention of the hon. Member for South Croydon that the proper way to value goods coming into this country is by the cost of production here. The proper valuation is what the purchaser in this country is willing to give, and that can only be the proper basis of valuation for any goods anywhere.

11.9 p.m.

Mr. LYONS: I should like, on behalf of many interests in my constituency, to support what has been said by my hon. Friend the Member for South Croydon (Mr. H. Williams) in giving a general welcome to this Resolution. There is no doubt that we did turn over in this country from a system of free imports to a system of control of imports with remarkable smoothness. Most of us who are Protectionists always thought that the system would be introduced with smoothness, but I think the whole House will agree, even those who object to the principle of controlled imports, so far as they can, that now we have a system of import control that import control should be given a fair chance and made
free from loopholes that are found to exist, and that are bound to be discovered by a vigilant Chancellor of the Exchequer from time to time. There is no doubt—and I speak from very considerable observation in my constituency with its diverse industrial interests—that this question of valuation has been a serious matter, and on behalf of those industries I desire to welcome the change which the Chancellor of the Exchequer indicates in this regard.
One particular trade I know suffered for a long time through false undervaluation by foreign competitors of their product coming into this country at a time when the only duty was an ad valorem duty. The difference of price was so substantial as to make the imports almost as high as ever, and the amount of revenue collected by the Treasury negligible. It is true that by the machinery which has been built up by this Government in its wisdom the specific duty now operating puts an end to that, but it is not everybody that has a specific duty, and it takes time to alter an ad valorem duty to a specific duty; in the meantime, by forestalling and manipulation of values, a good deal of harm is done to British industry. I believe that by this new system of valuation there can be done in this country a real valuation which will make unavailing for all time any manipulation which is engineered by our foreign competitors against the interests of British industry.
The hon. Member for South Croydon presents an unanswerable case when he says value must be considered in relation to the cost of production in this country. Once you ignore that principle you give rise to all kinds of dumping and selling in this country far under cost so as to be a very great menace to the workers in any British industry. The hon. Member opposite spoke to the effect that he had no regard to the differences of wages paid in other countries as compared with what are paid here. We learned only the other day that the Japanese worker in the hosiery trade gets a wage of about 15 pence a day. Our worker in the same trade gets a wage of about £4 a week. Are we to take it that this is now the policy of the free trade Liberals, to try to force down wages in this country, and bring down the standard of life to that in the East? If that is the truth to-day, the sooner
we come to an end of all the shibboleths of free trade and its low wages the better. The whole country will stand behind the Government and the Chancellor of the Exchequer in putting an end to what is an obvious game that is going on to interfere with the standard of life of the workers in our own industries.
I am sure we all welcome the Resolution. We welcome the position which is adumbrated, and we wish to do all we can to give our support to the Chancellor of the Exchequer in any effort he makes to see that the trade of this country is properly protected and the standard of life of the workers in these industries is upheld. Of the industries I have the honour to represent, one in particular has suffered for a long time from faked, manipulated values. I venture to think there will be complete satisfaction in what is being done to put a stop to the continuance of this ramp.

11.15 p.m.

Mr. COOPER: I think the hon. Member for Caerphilly (Mr. M. Jones) was very wise in saying on behalf of his party that they would await the Clause in the Finance Bill before delivering their final opinion on this subject, and in the meantime would not commit themselves in any direction. The Government feel that is the right point of view to take on this Resolution, which is in general terms. My hon. Friend the Member for South Croydon (Mr. H. Williams) realised, as he said, that he was speaking under a disadvantage in not knowing exactly what the terms of the Clause would be, but that did not prevent him from covering a great deal of ground and introducing a variety of topics. It nearly led to a full dress debate on the whole financial policy of the Government, the issue of Free Trade and Protection, between him and the hon. Member for South Shields (Mr. H. Johnstone). We were also privileged to hear of the details of fiscal policy in which he differs from Lord Beaverbrook. He also went so far as to suggest that duties that are now specific should be made ad valorem, and foreseeing the difficulties that might arise he explained how those difficulties might be overcome. He also asked the Chancellor whether this Resolution would deal effectively with dumping. That is
a question which I think we may pass over, because this Resolution has nothing to do with dumping. He asked, further, whether it would deal with goods from the Empire which are now paying no duty at all. Of course, an ad valorem duty would not have to be assessed on the value of goods which are not paying duty.

Mr. H. WILLIAMS: My point was this: If an article from a foreign country is liable to duty it will come under this Resolution. If a similar article is coming in from Empire countries and is valued for the purpose of the trade returns, will the same principle of valuation apply to the Empire article as applies to the foreign article which is valued for the purposes of duty. In other words, will an article coming in from a foreign country be valued on one basis and that from an Empire country on another basis?

Mr. COOPER: No, certainly not. The same principle will apply to both. The hon. Member for Caerphilly asked for some short explanation of the object of the Resolution. It is designed to deal with the endeavours to get round the ad valorem duty as it is imposed to-day; to defeat measures which are now being taken whereby goods pay duty on a declared value which is not their real value. It is designed to ensure that goods shall pay duty on the value at which they will be sold in the open markets of this country to buyers in this country. I hope and believe that when the Clause is framed it will meet with the approval of the House.

Mr. JOHNSTONE: Will the value be the price to the retailer or to the importer?

Mr. COOPER: The price in the open market in this country, not the price to the importer, that is the whole point.

11.26 p.m.

Major HILLS: I beg to move, in line 3, to leave out "and sixpence."
I will put my case quite shortly. I move the reduction, not mainly with the object
of helping the taxpayer, but to assist the recovery of the country, to reduce unemployment and, incidentally, to do something for the distressed areas. How much money will be wanted? How do I suggest that the Chancellor of the Exchequer should get the money? I make the amount something like £20,000,000. If all taxpayers paid at the standard rate, it would be £26,000,000, but many of them pay at a lower rate. No advantage would be gained in Income Tax itself by reducing the rate; there would be a loss, for the income under assessment is already fixed, as the House knows. Certain taxes depend, however, upon prosperity, and the spending of money in the country might be increased. Last year, the Chancellor told us, we drank 270,000,000 more pints of beer. We might increase that by the amount which is technically called one over the eight. He said also that we drank 700,000,000 more cups of tea; that might also be increased. Immense sums are raised by the taxes on beer and tobacco, £60,000,000 in one case, and about £70,000,000 in the other. A percentage increase in consumption might produce a very large sum of money. The stamp duties depend entirely upon business activity. In 1928, they produced £30,000,000. The Chancellor only estimates £25,000,000 this year, so there is a margin. I believe he has underestimated on Income Tax. I believe that 1934, on which that tax will be paid this year, was so much better than 1933 that the amount upon which the Chancellor reckons will, I believe, be largely exceeded. Thus can the money be found.
I come to unemployment. I am very glad to see the hon. Member for Leigh (Mr. Tinker) in his place because he challenged my statement that there was a connection between the rate of Income Tax and unemployment. I have gone to the trouble of getting out a few figures. I have taken unemployment in each January, after the standard rate has been either raised or lowered. I have started with 1923. In the Budget before, the standard rate was lowered from 6s. to 5s. in the pound. In January, 1923, there were 1,525,000 people out of work. The next change of tax took place the next year, and in January, 1924, when the standard rate was 4s. 6d., unemployment fell to 1,374,000. The next figure is that for January, 1926, when the tax was at
4s. in the pound, and then the unemployment figure had fallen to 1,318,000. There was, therefore, a steady fall corresponding to the fall in the standard rate of tax. From 1926 to 1930 there was no change in the standard rate. In January, 1931, the tax stood at 4s. 6d. in the pound—an increase from 4s.; and, compared with the time when the tax first stood at 4s., unemployment had exactly doubled. In place of 1,318,000, the figure was 2,663,000. The next figure is that for January, 1932. At that time the tax stood at 5s. in the pound, and the unemployment figure was 2,855,000. Lastly, in January of this year, the tax stood at 4s. 6d., and the unemployment figure had fallen to 2,325,000.
I do not say that the only thing that affects the unemployment figures is the standard rate of Income Tax. There are all sorts of factors which come in, and no one can quote one figure in a complicated problem like this and say that it represents the only solution. All that I was saying, when I interrupted the hon. Member for Leigh the other day, was that there was a close connection between the standard rate of tax and the figures of unemployment. It may be that the one reacts on the other in an opposite way. It may be that unemployment increases the necessity for raising the standard rate. I daresay it does. But I am quite sure, and I think these figures go a long way to prove it, that high taxation does throw men out of work.
I am afraid my plea is rather a forlorn hope. I do not think it will be received with enthusiasm from the Treasury Bench, and I believe it will be received with no enthusiasm from hon. Members opposite; but I do feel that we could start a real recovery of trade and industry if we lifted off this burden. I believe that to do so is by far the best way to get men back to work. The only way in which that can be done is by increasing the industrial employment that is open to men and women. Men are out of work because it does not pay an employer to employ them. If trade and industry could be made more profitable, it would pay to employ them, and therefore they would go back to work.
I could say a good deal more, but I will conclude by asking the Chancellor of the Exchequer if he does not think that there is a very strong case. I am
afraid that he will say that the money could not be found and that he could not budget for a deficit. I do not know what will happen at the end of March, 1936, but I do not think that it is a very bold prophecy to make that when we come to that date we shall see a balance in the Exchequer which will be quite sufficient to enable sixpence to be taken off the standard rate.

11.31 p.m.

Mr. TINKER: I wish that the right hon. and gallant Gentleman the Member for Ripon (Major Hills) had been able to introduce this matter a little earlier to-night. He has been waiting for the opportunity to raise the subject, and I have been waiting, because on these occasions we oppose each other. He advocates more indirect taxation as against direct taxation. We have to meet the expenses of the State from somewhere, and unless he is desirous of cutting down the expenses, either of the social services or of some other concerns, he must advocate indirect as against direct taxation. The taxes of the country have to come from somewhere. The huge bills have to be met in one way or another, and therefore, when the right hon. Gentleman speaks in that way, he must mean that the burden must be transferred to somewhere else. Last year he praised the Chancellor of the Exchequer because he took sixpence off the Income Tax, but he hinted that at the first opportunity he would try to get a little more taken off. The right hon. Gentleman knows very well that in the present Budget he cannot get anything taken off, but he is putting his case forward now because he thinks that the position may be favourable next year. I hope that the Chancellor of the Exchequer will not take any notice of that appeal.
At the present time under this Government indirect taxation is increasing. That is known to everybody. I have figures here to prove the point which I am making. The "Economist," in the issue published on 13th April, dealt with the question of direct and indirect taxation. It pointed out that in 1933–34 direct taxation was 54.3, and that in 1934–35 it had fallen to 52.2, and that, correspondingly, indirect taxation had gone up. I was not satisfied with figures of this kind so I asked the Financial Secretary to the Treasury for a statement showing how
the figures had gone up with regard to indirect taxation. It is worth while the House knowing how indirect taxation has increased in recent years. In the year 1924–5 direct taxation was 66.93 as against indirect taxation of 83.07; in 1931–2 direct taxation was 65.77 as against indirect taxation of 34.23; in 1932–3 direct taxation had fallen to 60.97 and indirect taxation had increased to 39.03; in 1933–4 direct taxation had fallen to 59.86 and indirect taxation had increased to 40.14; and in 1934–5 direct taxation was 59.77 and indirect taxation 40.23. It shows a tendency all along the line for an increase of indirect taxation. We on these benches are against that policy. We claim that all taxes ought to be direct and then everybody would know what they are paying. We think that it is wrong to cover up the amount that people have to pay. Many poor people do not know the burden that they have to meet. They are paying indirect taxation in various forms and do not realise that it is taxation. If taxation were direct everybody would know what they have to pay. Therefore, we are against the reduction of direct taxation in the form of Income Tax and against the suggestion that there should be an increase in indirect taxation.

Major HILLS: The hon. Member must realise that while indirect taxes have risen unemployment has fallen and the real value of wages has gone up.

Mr. TINKER: I am not able to follow the right hon. Member. If his point of view could be accepted as correct, then if we were to abolish Income Tax there would be no unemployment. If the Chancellor of the Exchequer could say to us that he would guarantee in twelve months time that there would be no unemployment if we took off direct taxation in the form on Income Tax, I should be with him, but I do not believe that it works in that way. Will any hon. Member tell us that there is any shortage of money as a result of the Income Tax. I understand that the banks are full of money and are wanting to let it out at cheap rates of interest if anybody wants it. Great fortunes are being made. In "Reynolds Newspaper" of 14th April, 1935, I find that Mr. Arthur Stanley Wills left estate of the gross value of £3,099,779.

Mr. DEPUTY-SPEAKER: The hon. Member had better direct that argument to the subject of the Death Duties.

Mr. TINKER: I realise that it is very difficult at this time of night to keep strictly in order, when everybody wants to get away. Therefore, I will not pursue the point further. I was going to observe that very large fortunes are being made, which show that Income Tax has not prevented these big money men from going on making money. If there was any need for reduction in Income Tax it would be shown. The right hon. Gentleman did not cover the whole of the ground. He did not tell the House what would be the full extent of his proposal. To take off one-ninth of the present Income Tax would be to reduce the amount of revenue by £26,750,000. That money would have to be found somewhere. I understand that he would find it by increasing the Tobacco Duty, the Beer Duty—

Major HILLS: There would be no increase in the rate of duty.

Mr. TINKER: Where would the money be found?

Major HILLS: From increased consumption.

Mr. TINKER: That is exactly the point that I want to press upon the House. If we could find money for some of the poorer families so that there could be increased consumption, we could recover our trade and have more employment. I have pointed out on previous occasions that there are 200,000 people in receipt of old age pensions who have to go to the Poor Law for relief. If these people were provided with more of the means to buy the necessaries of life we should increase the consuming power of the people and help to provide more employment. If you relieve the rich you are not helping the poor. The real way to increase employment is to increase the purchasing power of the poor people, and that will not be done by reducing the Income Tax. I am on this occasion supporting the Chancellor of the Exchequer in resisting this claim made by the right hon. Gentleman.

11.41 p.m.

Mr. D. MASON: I also desire to support the Chancellor of the Exchequer in his refusal to accept the proposal. It is very true that any large increase in indirect taxation presses hardest on the poor. There is no question about the figures, I gave them during the Budget Debate, and they show that the average of Income Tax and Surtax had declined whereas there has been a large increase in Customs and other indirect taxation. If any reduction could be brought about in the Income Tax I should certainly support it because it would undoubtedly stimulate employment, but you must balance your Budget. The argument of the right hon. and gallant Member for Ripon (Major Hills) was that by an arbitrary reduction of Income Tax you would stimulate the consumption of beer and tea and that by some means or other you would recover your revenue by increased consumption. If that be carried to its logical conclusion, why have Income Tax at all? It does not work out in that way. I am all for a reduction of the Income Tax if it be justified.
The Chancellor of the Exchequer has been able to effect a large saving through the conversion loan, amounting to several millions of pounds, and it is a dreadful reflection on his finances that so much of this huge sum has been frittered away in subsidies and that he has not been able to give us the relief which the right hon. Gentleman desires. I hope that when the time comes and there is a more progressive Government in power that whoever is at the Treasury, and there is an expanding revenue, will do what Mr. Gladstone did in his Budgets of 1860 and 1863, and gradually reduce indirect taxation and secure the revenue by stimulating trade and commerce. I agree that a reduction in taxation does stimulate trade, but any such reduction must be well founded. I do not agree with the right hon. and gallant Gentleman. If every country adopted free trade—

Mr. DEPUTY-SPEAKER: The hon. Member must not link Income Tax with free trade.

Mr. MASON: I am hoping for the day when we shall be able to reduce Income Tax to a reasonable figure.

11.46 p.m.

Mr. CHAMBERLAIN: The line of argument adopted by my right hon. and gallant Friend the Member for Ripon (Major Hills) will be familiar to those who have heard him speak on this subject on previous occasions. He told us tonight, no doubt bearing past experience in mind, that be hardly expected to get much support from any quarter of the House. I think his anticipations have been fully justified. I do not propose to detain the House by any lengthy observations now. I would merely say that I think, with my right hon. Friend, that a reduction of the rate of Income Tax is a good thing. I would like to see more of it. My right hon. Friend's speech was a justification of the action I took last year. It is not a thing we can do without any reference to the amount of money available for the relief of taxation. To take another sixpence off the Income Tax would cost £25,000,000 to £26,000,000 in a full year. We shall have to wait until some new Mr. Gladstone arises. Where he is to be found I do not say. Perhaps hon. Members will find some mason who will be able to lay the foundation of that structure which was begun by Mr. Gladstone. Until those times come we must make the best of our present circumstances.

11.48 p.m.

Mr. ALBERY: I have only risen because my right hon. Friend said he did not expect much support for a reduction of the Income Tax by sixpence, and also because the Chancellor of the Exchequer has rather anticipated that that support was not forthcoming. As a matter of fact I rose to speak at the same time as the Chancellor. I make no complaint that I was not called. But I want to say now that I think it quite undesirable that it should go out from this House in any way that there is not a large body of opinion entirely in favour of a reduction of the Income Tax whenever it can be achieved. There is also a considerable body of opinion on these benches that think, perhaps with some slight risk, Income Tax could have been reduced in this Budget. Many of us believe that the Chancellor has framed a very cautious Budget and that many of his estimates will be largely exceeded. I would like to remind him that the best arguments in favour of a reduction of Income Tax were given by himself in his Budget speech.
He started his speech by saying that he made a reduction of sixpence in the Income Tax last year solely because he believed it would give such an impetus and encouragement to trade and enterprise that it was worth doing, and, I understood him to say, worth any slight risk there may have been at that time. He went on later to congratulate himself and the House, that his views on that matter had been justified, and that there had been that improvement in trade and industry. Income Tax is still much too high, and is undoubtedly a very powerful cause in impeding speedier recovery.

Amendment negatived.

Motion made, and Question proposed, "That this House doth agree with the Committee in the said Resolution."

11.51 p.m.

Mr. MORGAN JONES: I intimated earlier through the usual channels that we might perhaps invite the Chancellor of the Exchequer to say a word on the implications of this Resolution. I think perhaps he will agree that this is a section of his Budget Resolutions to which he made no reference at all in his Budget statement. If it is not convenient for the right hon. Gentleman at this late hour to say anything, we shall not complain, but, if he can do it in a very few minutes, we should be very glad.

11.53 p.m.

Mr. CHAMBERLAIN: I think I can make the matter plain in a sentence almost. This is a consequential Resolution following upon the proposal that the tax on the first £135 of taxable income shall be charged at one-third the standard rate instead of at one-half. The rebate on insurance premiums is now at the rate of 2s. 3d., but you cannot give a rebate at a higher rate than the tax which is payable on the income.

Bill ordered to be brought in upon the said Resolutions by the Chairman of Ways and Means, the Chancellor of the Exchequer, and Mr. Duff Cooper.

FINANCE BILL,

"to grant certain duties of Customs and Inland Revenue (including Excise), to alter other duties, and to amend the law relating to Customs and Inland Revenue (including Excise) and the National Debt, and to make further provision in connection with Finance," presented accordingly, and read the First time; to be read a Second time upon Monday next, and to be printed.—[Bill 59.]

The remaining Orders were read, and postponed.

It being after Half-past Eleven of the Clock, Mr. DEPUTY-SPEAKER adjourned the House, without Question put, pursuant to the Standing Order.

Adjourned at Five Minutes before Twelve o'Clock.